Bogus downgrade. I am *NO* supporter of Obama....but:

1. The Obama Admin slammed the S&P for their asinine and false ratings on securities that led to the whole housing debacle.
2. At first, the S&P were of by $2 *TRILLION* dollars on U.S. debt...
3. *NO* other rating agency has downgraded the US credit.

Of course....Washington is full of irresponsible jackasses that would rather campaign on "I rebuild US-47" (some little used road)...and does NOT say, (While taxing the income of your grandchildren's grandchildren! Suckers!!!)

The down grade was totally political. Obama slammed the S&P, the S&P slammed Obama back and want him out.

BUT....and it is a HUGE butt...(*much like Michelle Obama's butt is huge and growing...*)...the S&P actually has enough cover ( the U.S.'s *horrifying economy and growing debt) that they can make the downgrade and NOT be castigated....because it is *reasonable* to downgrade the US debt.

It was a political attack...and yet Obama is such a poor President he opened the door for such attacks.

You really think the folks at S&P would risk negating the world economy just because Obama said some mean things about them?

This is partially a political attack, but also is based firmly in economic reality. The United States has debts and obligations worth an unimaginable amount of money. The political class in Washington has shown no inclination to seriously reform entitlements and military spending and our byzantine tax code until this winter, and when a few serious people tried to get the ball rolling (Paul Ryan & Co.) they were vilified. That lead to an opportunity for the more irresponsible Tea Party freshmen to play a game of chicken with the debt ceiling. This demonstrated that not only is the debt and deficit problem an existential threat to the country, but any change is going to be extremely difficult due to Democrats' obstinacy and the lunacy of a good amount of Republicans. That's why we were downgraded.

Having said that, the other two important agencies didn't downgrade and firms take all three of them into account when doing whatever they do in the bond market and other areas this is important in. So after a rough couple of days we'll probably go back to the malaise we've had for the past year or so. That's still a bad place to be but it isn't Fall 2008 bad. At least not yet.

Remember, Congress still needs to pass a budget (we're pushing two years without one). That fight is going to be really important to what happens with the credit rating.

@Invictus. trust me....NOT an Obama supporter. But...US is still the #1 economy. There was NO massive sell-off of our bonds by foreign coutnries that hold our debt -- i.e. they do not fear our credit risk. Also, NO other credit agency has downgraded the US.

I do not think for one second that the US economy is in good shape. Obama is *trying* to kill our economy with his *massive* increases in deficiet spending and overall debt. Had he been allowed ton continue on the course charted by his first 2 years in office, everyone WOULD have downgraded us.

I find it interesting that you note we have not passed a budget in over two years. You can thank Obama and the Democrats for that, who held the White House and Congress with supoer-majorities...and yet failed to pass a budget. Why is that? So....a country running aground, failing, unemployment skyrocketing, real wages falling...and it is getting far worse under Obama. Why?

So yes....it IS partially a plitical attack by S&P. In part, realize that S&P MAKES MONEY off our economy, yes? And so, if they see a party with too much power, and with terrible policy-making....they might attack them in order to encourage the country to change course....so they can make money. Warren Buffet and George Soros are *financial* institutions unto themselves...and THEY involve themselves in politics. Why? To make money. Throw Trump in to that mix, too.

Hell yes....S&P made a Political Statement about the disaster taht is the US economy. And more power to them for it.

The Democrats didn't pass a budget because the leadership didn't want their members voting for yet another unbalanced budget before the 2010 election. It's pretty simple, if wildly callous. Since the Republicans took over there's been no budget because the Senate Democrats vote down everything presented to them (which includes Obama's own budget which was so outrageous not a single Senator voted for it).

Obama is not trying to destroy the economy. He thinks what he's doing is right. He happens to be mostly wrong, but he comes at it with the best of intentions.

The reason there was no sell off of bonds (yet) was because the Euro is could very well be in its death-throws. That makes the United States the safest harbor right now, but only by default and not by merit as it was in the past. Foreign countries would drop the dollar in a heartbeat if the Fed made a move to inflate away the debt, which is what is going to happen if this spending crisis isn't brought under control in a significant way by the Super Committee on December 23rd and in a permanent way sometime after the new Congress and possible new president are sworn in in 2013.

"The political class in Washington has shown no inclination to seriously reform entitlements and military spending and our byzantine tax code until this winter, and when a few serious people tried to get the ball rolling (Paul Ryan & Co.) they were vilified. That lead to an opportunity for the more irresponsible Tea Party freshmen to play a game of chicken with the debt ceiling. This demonstrated that not only is the debt and deficit problem an existential threat to the country, but any change is going to be extremely difficult due to Democrats' obstinacy and the lunacy of a good amount of Republicans. That's why we were downgraded."

Excellent analysis, Invictus.

Invictus + 1

Nearly every politician in Washington doesn't care about anything except getting reelected. Cutting spending is generally a very poor way to do that, except if you got elected by the Tea Party. The Tea Party was playing chicken with the debt ceiling, but we shouldn't blame them. Years of half-assed management of the budget and ignorance of the deficit (by Bush AND Obama) led to the founding of a party that got sick and tired of business-as-usual governing. 240 years ago, a bunch of ordinary people circumvented the usual procedures and upset the established order. Why can't it happen now?

The Democrats and Republicans created the Tea Party when they started to suck at governing.

Bearing in mind that the US came with a day or so of defaulting, the surprising thing is that other rating agencies still give them a AAA rating.

When Canada was downgraded a few years ago we recovered the AAA rating by reducing the deficit and changing our tax structure. We eliminated the export killing 13% manufacturing tax and switched the burden to consumers by introducing a 7% Goods and Services Tax. (This has since been reduced to 5% by the minority conservative government)

You're right about it being a wonder that the other agencies haven't downgraded us, Maniac. However, there was never a chance the United States would really "default." There was plenty of money coming into the government to pay bondholders. Not paying bondholders is what default means, basically. Indeed, there was even enough cash to pay entitlements and military pay without more borrowing.

The problem was that there wasn't money left over to pay ANYTHING else. That's a serious problem (I'd even say it's worse than default in its own way), but it isn't technically default. That terminology is just simplification by the media. Don't get me wrong, if the ceiling hadn't been raised there could have been an unimaginable economic calamity right away on August 2nd. It's just that, in the interests of precision of language, the trigger would not have been a true default.

Gunfighter06, you really need to stop agreeing with me so much. I can't be that correct on that many things.

"Gunfighter06, you really need to stop agreeing with me so much. I can't be that correct on that many things."

Hahaha. I'll see what I can do, Invictus