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So Standard & Poor’s Maybe Can’t Do Basic Math, So What?

Off by $2 trillion? NBD.

A mathematical error discovered late Friday by Treasury Department officials threw into limbo, at least temporarily, plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said. The wild back and forth between the Treasury Department and S&P Friday afternoon illustrated the dramatic stakes as the ratings firm moved to downgrade the debt.

S&P officials still had not decided how to proceed and could move forward with a downgrade despite the issues raised by the White House, the people familiar with the matter said. A decision could come later Friday. S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the debt, a government official said, and the firm presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn’t move to comprehensively tackle its long-term fiscal woes.

After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes. S&P officials later called administration officials back to say they agreed about the mistakes, though they didn’t say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do.

Math Error Fuels Fight Over Rating [WSJ]

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105 Responses to “So Standard & Poor’s Maybe Can’t Do Basic Math, So What?”

  1. Guest says:

    I'd still work for S&P than UBS

  2. so f*cked says:

    Change. Now I get it.

  3. Give Me Druries! says:

    AA is the new killing it.

  4. Guest says:

    70 years and 12 Presidents(both Democrat and Republican)………AAA.
    2 1/2 years of Obama's wild spending………………Downgrade.
    Everyone repeat after me:
    Thank You, Comrade Obama!!!

      • counterparty says:

        So, you're impressed by self-serving tripe from the White House? How nice for you.

      • The fact that lolol's chart figures taxes as a zero-sum game is ridiculous. Anyone advancing it as proof doesn't fully undertand the effect that raising or lowering taxes has.

        For an understandable lesson, study the devastation that happened to the luxury yachting industry after the 10% luxury tax.

      • Guest says:

        Even taking the chart at its word–it's kinda glossing over the $3.6 trillion in new debt from Social Security, Medicare, and Medicaid that's listed at the bottom of your link. This, along with defense, has also been the fasted growing part of the debt (except that Social Security, Medicare, and Medicaid account for a lot more of the budget than defense does).

        To label that thin slice in the middle as "Obama's policies" is a slight of hand. Obama and the Democrats had been fighting to keep these expenditures from being cut. For that matter, Bush attempted to have these expenditures cut early in his second term and was thwarted by the Democrats. They're still going nuts over plans to cut this. This is their turf. This is a gigantic part of the debt that they're responsible for and that they continue to bear the blame for.

    • guest says:

      I hope you burn for your stupidity.

    • anon says:

      you're a fucking idiot.

    • SRH says:

      First repeat after me: I have shit where my brains should be.

      • MarFa says:

        Be sure you grandma was a bitch, your mom was one too and you are the filthiest of them all…boy you are!

    • The Rest of America says:

      I hate people like you – you're probably not very intelligent, don't know much in the way of facts, watch a lot of fox news, the list can go on….

    • Guest says:

      Not entirely fair. This is also due to what happened on other people's watch.

      Given that that's the case, how about this:

      Obama deserve as much credit for S&P's downgrade as he does for catching Bin Laden.

    • guest says:

      Eat shit and die

    • FinnHopKee says:

      So, what you are saying is that after $10 trillion of debt, a near collapse in 2008 where assets deflated, where government revenue has dropped, in addition to tax cuts demanded by Republicans in a 2010 deal, and where the 2009 budget was Bush's, and where the costs of two wars were brought "on budget" (instead of excluded per Republican practice) it's all Obama's fault?

      What is this wild spending of which you speak? If you are going to make wild ridiculous characterizations, at least, back it up with some context and truth. Trump is that you?

    • Elszstain says:

      Yes because this is so much less worrying for global financial markets… http://www.guardian.co.uk/world/2011/aug/07/rick-

  5. Gay Fin Jock says:

    Bess you should run for Treasury Secretary. I'm sure you'll find $3 trillion error instead of $2.

  6. Backdoor_Bess says:

    Looks right to us……..

    ~ SEC

  7. dumb credit guy says:

    This is beyond irresponsible. IMO the mortgage issue was caused by these rating agencies selling ratings.
    At least in the short term we are fucked!

  8. CAPM is fucked says:

    Using the Liechtenstein 30-yr AAA notes as the risk-free rate in finance is the NKI

  9. AIG Quant (Ex UBS) says:

    What's the big deal really? This is actually going to revive the housing market., AIG, BofA, Citi etc. The only AAAs left will be RMBS senior tranches. Who's long RMBS? Boom. Done.

  10. redman says:

    just shows you can't trust an injun (dot not feather).

  11. Guest says:

    "we've made ratings decisions using worse math"

    -S&P Official

  12. Top Tier says:

    Evidently it was not a mathematical error, instead they were using the wrong baseline assumption. Sounds like an associate fucked up

    -Top Tier

    • GuestNOW says:

      As long as it was just an associate and none of his superiors caught the error, we're all good, thanks.

  13. UFO says:

    Uhm, people still pay attention to S&P? Who the fuck cares what they have to say either way on the issue? It's not like they missed any important details in the course of the last decade…..

  14. merkin capital ptnrs says:

    im gone for 2 months being terribly gainfully employed and there is a completely new commenting system? wtf. my likes to comment ratio on disqus was the stuff of legend…LEGEND.

    AND NOW MY NAME IS TOO LONG?!! Good God this place is falling apart.

  15. Guest says:

    Weekend comments are the NKI.

    – Kid with a life

    • kid w/ buying power says:

      Get yourself a box of cereal and shut the fuck up.

    • PermaGuestII says:

      2 things-
      1. Australia opened at 6:30 last night, NY time; Tokyo at 8:00 p.m.; London at 3 a.m. Your weekend doesn't necessarily correspond to the rest of the folks on this board;
      2. Whilst I'm sure this news had no affect on your pool time with your 14 new best friends at your share house in Hampton Bays, some of us were actually on the desk this weekend. Just sayin'

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