S&P Downgrades U.S. Credit Rating
Read Time:2 Minute, 41 Second
US credit rating reduced for first time in history
The politicians have really stunk up the room now. From a weak president to a demanding Tea Party and their loyal minions, the Republican congress, blame has plenty of room to go around. The United States of America can now hang its head in shame and suffer the consequences of this embarrassment. No doubt China will want reassurance that we are capable of paying our debt, and other countries will want reassurance that we can be counted on for economic support.
For the consumer such a downgrade may see a rise in interest rates and a double-dip recession, something we hardly need during these troubled times.
Here’s the story from BBC News:
One of the world’s leading credit rating agencies, Standard & Poor’s, has downgraded the United States’ top-notch AAA rating for the first time ever.
S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits.
The agency said the deficit reduction plan passed by the US Congress on Tuesday did not go far enough.
Correspondents say the downgrade could erode investors’ confidence in the world’s largest economy.
It is already struggling with huge debts, unemployment of 9.1% and fears of a possible double-dip recession.
The downgrade is a major embarrassment for the administration of President Barack Obama and could raise the cost of US government borrowing.
This in turn could trickle down to higher interest rates for local governments and individuals.
S&P had threatened the downgrade if the US could not agree to cut its federal debt by at least $4tn over the next decade.
Instead, the bill passed by Congress on Tuesday plans $2.1tn in savings over 10 years.
S&P said the Republicans and Democrats had only been able to agree “relatively modest savings”, which fell “well short” of what had been envisaged.
The agency also noted that the legislation delegates the lion’s share of savings to a bipartisan committee, which must report back to Congress in November on where the axe should fall.
The bill – which also raises the federal debt ceiling by up to $2.4tn, from $14.3tn, over a decade – was passed on Tuesday just hours before the expiry of a deadline to raise the US borrowing limit.
S&P said in its report issued late on Friday: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government’s medium-term debt dynamics.
“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.”
The agency said it might lower the US long-term rating another notch to AA within the next two years if its deficit reduction measures were deemed inadequate.
The rating reduction could well cause interest rates to rise.
What do you think of this late breaking development? Does America deserve her credit rating downgrade and if so what can she do to fix it?
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The Tea bags did what everyone with sense told them not to, and got exactly what everyone with sense told them they would. Now, watch them not connect the dots.
After the intitial fallout and the markets dropping a few points, the adults will come to their senses and everyone will realize S&P was ignorant for making more of a political statement about the idiots in the Tea Party caucus who held our economy hostage, and will until we’re rid of them.
And remember S&P also graded the bailed out banks AAA. Then downgraded Warren Buffett’s Berkshire/Hathaway.
This stuff makes for good buying opportunities on dips. In the long run the world trust the USA more than any other nation. Anyone who thinks this is a blow to patriotism is a fool. Gonna go buy some Russian debt anyone?
best rebuttal i’ve ever seen. Penetrating. astute. unassailable. fucken hilarious.
On a conservative blog, I have finally the got recognition I have always deserved. Debating the credit downgrade. I know it should not be this way, but there is no greater satisfaction than infuriating a right wing nut. A very conservative libertarian, whom I have butted heads with often before, offered this in rebuttal:
Only the stupidest, retarded moron who can’t fathom breathing through their nose would equate people who kill women and children with not wanting to fun Medicare. That’s not terrorism, it’s democracy. Myste, go fuck yourself in the face. Any thing you’ve ever said it negated, you’re a total waste of a human being, you are not smart, intelligent, articulate or worth my oxygen you are currently wasting. You should do humanity a favor, stick a gun in your mouth and pull the trigger ridding the human race of your idiotic ramblings. Tie a cinder block around your neck and go swimming this second and do the world a favor. Your worthlessness is irritating me.
I think he intended to upset me, but I can’t stop laughing. He made my evening. I finally excelled at something!
America elected the Tea Party its willingness to default on its debt followed. Therefore, our credit rating should be downgraded.