[Novus]

"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."

Laying it right in the lap of the Republicans, because of their taking the full faith and credit of the US hostage and turning it into political theater.

When one party, instead of quietly doing the the responsible thing and raising the debt ceiling as part of normal housekeeping, as it always has been, decides to use it instead to extort concessions from the other party on the threat of destroying the full faith and credit of the US, .... oops, the gun accidently went off and shot the hostage anyway!

Imagine that.

Hostage taking doesn't usually work out the way the hostage takers hope.

Friggin' Morons. Tons of financial instruments and pensions worldwide require that they only hold AAA rated securities. So the dumping will now begin.

That is actually an incorrect analysis of the situation. I am no fan of the Republicans or the Tea Party but I know well enough that they are little more than fall boys for what is going on here.


The USA should have lost its' AAA rating when it opened the TARP window in the fall of 2008 with the "full faith and credit of the US." The US paid out in full for bogus securities at mark to make believe prices. By drinking that poison the US sealed its' fate. TARP was my canary in the coal mine. In 2008 we faced a banking crisis now in 2011 we face a continuity of government crisis. TARP was the biggest swindle in the history of the human race. The entire US treasury was swapped for some phony securities in the worlds largest shell game.


The debt debate was all theater so the Democrats can blame the Republicans and the Republicans can blame the Democrats thus providing cover for the bankers to get out of dodge unnoticed. By the time the public catches on and that is if they ever catch on the perps will be sitting on a beach in Dubai.

[Cog]

While Obama has a legitimate argument that he inherited a very bad economy from Bush, he owns this debt downgrade since its obvious to anyone, that he has no interest in cutting deficit spending. If I were a Republican candidate for president, you could count on me bringing up the debt downgrade every chance I could. First time ever downgrade in US sovereign debt and its all owned by Obama now.

[EnergyUnlimited]

I suspect some very serious pressures are being applied to the S&P. My bold prediction is they change their rating back to AAA before the Chinese Markets open.

If they reverse downgrade, they are finished as well.
So they won't, but maybe some of their senior managers will soon hear child rape charges.

[EnergyUnlimited]

S&P Offices Demolished by Cruise Missile

Funny, S&P made a $2T arithmetic error, but after consideration, decided to downgrade anyway:

The $2 trillion error, urgent meetings & then a downgrade

Heck, what's a couple trillion more or less?

American economy is a $100 T swindle.
Few $ trillions one way or another don't change much in general picture.

Anyway bankrupt nation still holds AA+... weird.... in this case my drunkard neighbor is holding AAAAAAAAAAAAAAA.
Whenever he borrowed something, he have always paid and his fish processing company is debt free, with substantial assets and balance sheet good enough to let him drink a lot and have plenty of mistresses.
So when on one or two occasions he have run out of cash in the bar I was only happy to lend him...

So now dollar (USD) will stand for United States Default.

[prajeshbhat]

Don't you think hyperinflation is the best deal for America? The other option would be to pay down the debt honestly by handing over real assets to foreigners. Why do that? Just wipe out all the debt and restart the system with a new currency. And don't feel sorry for those people who lose value on their dollar denominated assets. Look at it as a bad business decision.
I think those people who are calling for gold standard and strong dollar should understand that there is absolutely no point trying to save a dead beat currency. Worse, you could lose all your gold reserves to foreign creditors.

[Bill Hicks]

Which is not to say that people are dumping the dollar, no, people are fleeing to the dollar! TheAutomaticEarth called this months ago!

Still there's no substitute for cold, hard cash.

Yeah there is...cold, hard PMs.

[Bill Hicks]

I suspect some very serious pressures are being applied to the S&P. My bold prediction is they change their rating back to AAA before the Chinese Markets open.

Yeah, but the chooks are out of the henhouse now, as this downgrade came from within the U.S. establishment. Unlike that of the Chinese Agency's recently.

Yep...too late to take it back. If you don't want the baby, you can't get "un-pregnant," all you can do is have an abortion, which is what changing the rating back would be.

[basil_hayden]

If you survey the charts posted earlier in the thread for peaks and valleys and project to the future, I'd say world war is just around the corner.

[Rod_Cloutier]

Follow the money...

Who pays for S&P, Fitch, and Moody's to operate? The people who are paying the bills are the people who are benefiting from the chaos these corrupt rating agencies are generating!!!

(Also these are the people who will need to be prosecuted when the governments of the world finally wind these corrupt, useless, companies down)

[pedalling_faster]

WOW ! my chickens now have a higher debt rating than the US government !

i co-sign on all their loans, and my credit rating is about 800.

maybe i should talk to S&P about an upgrade.

[SeaGypsy]

The main reason hyper-inflation is not at all a pleasant option is primarily in what you pay at the bowser for gas will go through the roof, bringing on rapid death to suburbia.
Oil is the lynchpin in the entire equation.

[Bill Hicks]

Follow the money...(Also these are the people who will need to be prosecuted when the governments of the world finally wind these corrupt, useless, companies down)

Don't wait up all night for THAT to ever happen.

[EnergyUnlimited]

Yep...too late to take it back. If you don't want the baby, you can't get "un-pregnant," all you can do is have an abortion, which is what changing the rating back would be.

Nope. Abortion would be clandestine pressure on S&P before decison is announced.
Now it would be infanticide.

[Cog]

S&P will not be changing this rating back to AAA. Does anyone seriously think we will have less debt a year from now?

We are getting to see the downfall of a superpower at a very accelerated rate. Unless you are in your upper 70's you will get to see it all pretty much unwind. Aren't we lucky to be here to see it?

[DomusAlbion]

We are getting to see the downfall of a superpower at a very accelerated rate. Unless you are in your upper 70's you will get to see it all pretty much unwind. Aren't we lucky to be here to see it?

Lumpy and I were just discussing this (the unwind) just the other day. We’re in our early 60’s and will be able to ride the crest of this tidal wave of doom to our natural end. However, the devastation that follows will make the lives or our children and grand-children nearly untenable. They’ll need to be very tough or they’ll be overwhelmed and destroyed.

[eXpat]

What country still has AAA ratings, or is there any..

Here is the list:
http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating
Austria, Canada, Denmark, Finland, France, Germany, Guernsey, Hong Kong, Norway, Singapore, Sweden and Switzerland among others, have currently AAA rating.

[drgoodword]

Here's what seems to be an early trial balloon for one of the Obama re-election team's main talking points to explain the continuing bad economy:

Is the U.S. Credit Rating a Victim of GOP Sabotage?

But Congressional Republicans deserve much more of the blame. For this calamity was entirely man-made -- even intentional. The contemporary Republican Party is fixated on taxes. It possesses an iron-clad belief that the existing tax rates should never go up, that loopholes shouldn't be closed unless they're offset by other tax reductions, that the fact that hedge fund managers pay lower tax rates than school teachers makes complete sense, that a reversion to the tax rates of the prosperous 1990's or 1980's would be unacceptable.

In the past two years, this attitude has combined with a general hostility to playing ball with Democrats on large legislative issues, a near-blanket refusal to conduct business with President Obama, and, since the arrival of the raucous Tea Party freshman, a cavalier attitude toward the nation's obligations. It was common to hear duly elected legislators argue that it wouldn't be a big deal if the government were to pierce the debt ceiling and default on its debts.

I doubt Obama's team will ultimately be able to sell the blame for this dent in America's credit rating as belonging more to the republicans than to the democrat president, but this tea-party fiscal fundamentalism angle is probably their best shot.

On a somewhat related note, it's my sense that a "blame-the-rich" attitude is showing up more and more in mainstream media punditry. Certainly, if the on-going recession continues to deepen and unemployment (or under-employment) gets worse, I can see a revival of the depression-era "tax-the-rich" (both individuals and corporations) spirit in public sentiment spread to include the broader American political spectrum. The libertarians probably stand to lose the most here...poverty tends to value security of food and shelter above political freedoms.

[EnergyUnlimited]

S&P will not be changing this rating back to AAA. Does anyone seriously think we will have less debt a year from now?

We are getting to see the downfall of a superpower at a very accelerated rate. Unless you are in your upper 70's you will get to see it all pretty much unwind. Aren't we lucky to be here to see it?

I am an outside observer so I hardly give a damn about it .
However you are a subject of superpower, so are you ready to concede to Chinese and come to parity with Mexicans?
I am not sure.
It must hurt.

[EnergyUnlimited]

On a somewhat related note, it's my sense that a "blame-the-rich" attitude is showing up more and more in mainstream media punditry. Certainly, if the on-going recession continues to deepen and unemployment (or under-employment) gets worse, I can see a revival of the depression-era "tax-the-rich" (both individuals and corporations) spirit in public sentiment spread to include the broader American political spectrum. The libertarians probably stand to lose the most here...poverty tends to value security of food and shelter above political freedoms.

Well...
Within few years DOW will hang around 4000 (or 40000000 if printing press is revved on)...
There will be not much to tax for socialist idiots...
Very good...
It is only nice to see when a tax man is coming to tax a pile of worthless shit.
Bye bye big government.
Bye bye welfare.

Ultimate "tax/dispose the rich" project was run recently in Zimbabwe.
It will be only a fun to see it run again in US with poor self entitled urban mob facing consequences...

[PrestonSturges]

People are overlooking the an important factor - the international bond markets and rating agencies are not obligated to listen to GOP fairy tales about tax cuts paying for themselves. In the US, the media sits and nods listening to their blather like someone trying not to piss off their senile rich uncle.

Of course the GOPs response to the downgrade will be to demand further tax cuts, but the response will be a warning that if the GOP keep pursuing this strategy, the dollar will be subject to further downgrades.