Billionaire Warren Buffett said Standard & Poor’s erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years.
The U.S., which was cut Aug. 5 to AA+ from AAA at S&P, merits a “quadruple A” rating, Buffett, 80, said yesterday in an interview with Betty Liu at Bloomberg Television.
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“Financial markets create their own dynamics, but I don’t think we’re facing a double dip recession,” said Buffett, chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A)
Bloomberg: Buffett Says Cutting U.S. Rating Was Mistake, Sees No Recession
S&P has an agenda. This is a political decision, not an economic rating.
Standard & Poor’s, the rating company that downgraded the debt of the United States to AA+ from AAA for the first time, now finds itself assailed by investors led by billionaire Warren Buffett for making a political decision that has more to do with Tea Party politics than the financial stability of the U.S.
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The New York-based subsidiary of McGraw Hill Cos., whose inflated grades of mortgage-backed investments -- paid for by the banks that created the toxic debt -- were blamed by Congressional investigators for fueling the financial crisis, rattled investors around the world and provided fodder for President Barack Obama’s rivals in the 2012 elections.
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S&P’s decision was at odds with the other two main ratings companies, Moody’s Investors Service and Fitch Ratings. Both affirmed their AAA grades on U.S. debt on Aug. 2.
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S&P’s move “doesn’t change anything about the risk of U.S. Treasuries,” Peter Fisher, New York-based BlackRock’s head of fixed income and a former undersecretary of the U.S. Treasury Department, said in a Bloomberg Television interview.
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“They think they’re giving an honest appraisal but they have instead become hopelessly entangled in the politics of the national debt,” Chris Rupkey, the chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in a Bloomberg Television interview on Aug. 5. “The U.S. is not out of money, it has the financial resources to make good on its debt, and it should not have been downgraded.”
Bloomberg: S&P Seen Surrendering to Tea Party Costing U.S. Taxpayer
President Obama will speak to the press this afternoon.