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Obama Isn’t Concerned About Change In Credit Rating

Posted by Larry Doyle on May 22, 2009 1:58 PM |

White House Press Secretary, Robert Gibbs

Bloomberg reports, Gibbs Says He Doesn’t Believe U.S. Credit Rating Will Be Cut:

White House Press Secretary Robert Gibbs said he doesn’t believe the U.S.’s AAA credit rating will be cut.

In response to questions at his regular briefing, Gibbs said President Barack Obama isn’t concerned about “a change in our credit rating.” Asked if he expects a cut, he said, “I don’t believe they will be cut.”

Investors sent U.S. bond and currency markets lower amid concern for the AAA rating after Standard & Poor’s lowered its outlook yesterday on the U.K.’s AAA rating to “negative” from “stable.”

A few comments and questions . . .

1. Gibbs should know better than to make a casual comment about our sovereign credit rating. The market listens to every word emanating from an administration to detect the level of seriousness and “risk management” being employed.

2. Is Gibbs indicating that President Obama isn’t concerned in that he does not believe the rating will be cut, or does not really care if it is cut? There is an enormous difference in those interpretations. Gibbs should not be vague.

3. When asked his own opinion, Gibbs provides a glib response without substance. He does not inspire confidence!

The Press Secretary needs to understand that the markets listen, monitor, study, and react to each and every word from the Administration. I, and others, want greater clarity from our financial leaders in Washington. Ben Bernanke and Tim Geithner pick and choose their words very carefully knowing that Wall Street picks up on every nuance. Gibbs should take a lesson on addressing economic and financial topics.

Wall Street and every other financial center in the world detests an official who dismissively passes off a topic of very serious substance.

Why and how do things like this happen? Inexperience and little market knowledge.

For what it is worth, from the time of this news release, long term interest rates increased another 3 basis points.

LD






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