S&P Downgrades U.S. Credit Rating From AAA

[OLD WORLD SHORTIE]

Ho lee chit were screwed.

Urgent: Credit rating agency Standard & Poor's on Friday downgraded the United States' credit rating for the first time in the history of the ratings.
The credit rating agency said that it is cutting America's top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.
A source familiar with the discussions said that the Obama administration feels the S&P's analysis contained "deep and fundamental flaws."
S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.
S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country's debt.
After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package that averted a possible default.
In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.
S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."

 

[CPL]

I am shocked that more people did not see this coming!!!

S&P told the US Government to cut 4 trillion --- The debt deal that passed congress ONLY CUT 2.4 TRILLION!!!


I mean HOW STUPID do we have to be?!?!

Obama and the Democrats can blame the Tea Party all they want, but in the end - If the Tea Party plan would have passed, it would have cut spending enough to allow S&P to feel confident in our AAA rating.

 

[justintime]

This is serious stuff!  It should serve as a wake-up call if nothing else. People have got to realize that everyone has to quit relying on government to do everything for them. I can't even imagine how this amount of debt can be serviced without default, especially if we are heading into another recession. This drop in the credit rating could cause a recession all by itself.

 

[The Show]

I guess this is also Bush's fault

 

[knabe]

can't we just print more money?

have another stimulus to democrat donors?

eliminate tax breaks and subsidies?

 

[Show Dad]

Uh! Duh! Big red truck. It's time to pay the piper.

 

[mooch]

I can't say this loud enough, VOTE ALL THE OLD INCUMBENTS OUT  !!!!!! The government has been run into the ground by piss poor management. If your rep or senator has been in office for any length of time they are part of the problem not looking out for your best interest but their own. No tax base and high unemployment because they let all the jobs go to Mexico and over seas to protect their investor cronies and PAC contributors. 80 some percent of the people disapprove of tthe way congress is doing their business, the lowest ever.Start the ground swell now , fire them  VOTE THEM OUT.
There I feel better. Not really its a mess.

 

[SWMO]

I agree, Democrate or Republican if they are currently in office they are part of the problem and need to go.  TERM LIMITS!!!! 

Vote the old guard out of office and see how they fair in the real world.  Ooops, even out of office they don't have to face reality as they have ensured that their private retirement is safe and sound.

 

[knabe]

VOTE THEM OUT.

people refuse to vote people out who promise to print money.

it's the safest way to tax people who are paying taxes and not "raise" their taxes.

the tax base needs to be increased in addition to closing loopholes.

but really, who can resist free money.

the retirement package they voted themselves must be rescinded.

 

[hamburgman]

agreed Knabe, I found it hilarious how certain members of this new congress were concerned about their government healthcare when they took office, and their retirement packages seem to be a little bigger than private workers. 

As for the downgrade imo it really means nothing.  Historically industrialized countries that have large economies and have been downgraded haven't been hurt in the long run, and the interest rate on a 10yr went below 2.4% today which is a pretty big slap in the face to S&P.  I agree we have a long term debt problem no doubt about it.  Also did anyone hear about how S&P didn't calculate the impact of the cuts correctly?  Really seems to show why the markets seemingly rejected the downgrade (bond markets that is).

 

[nate53]

Correct me if I'm wrong, but I thought the stock market acted quite frantic in regards to the downgrade, I mean that was the main reason the Dow was down 600 and some points, and is also the reason the bonds did so well which in turn is why interest rates dropped a little more.  More insecurity in the market should make the bond market do better (low risk, supossedly safe?).  I'm not sure if I believe S & P was off by 2 trillion or not, maybe just Obama trying to take away some of S & P's credibility?  All I can do is shake my head with wall street, everybody knew this (downgrade) was coming  and yet everybody is overreacting and acting frantic once it came down officially (speculation driving).  I sure hope S & P's downgrade retains some credibility and pressures Washington to change their spending (printing ways), although Obama is probally right now trying to figure how to get more money for a stimulus package that in his mind will certainly save the economy?  I wander what will happen tomorrow??????????????????????????????

 

[knabe]

dems idea to create jobs is to give money to their constituents to make products no one wants at double or triple the prevailing wage.

these constituents then pay no taxes and now they want to repeat the process.

end game is continual redistribution of earnings (not wealth) from those who earned it and give it to those who didn't.

 

[The Show]

Correct me if I'm wrong, but I thought the stock market acted quite frantic in regards to the downgrade, I mean that was the main reason the Dow was down 600 and some points, and is also the reason the bonds did so well which in turn is why interest rates dropped a little more.  More insecurity in the market should make the bond market do better (low risk, supossedly safe?).  I'm not sure if I believe S & P was off by 2 trillion or not, maybe just Obama trying to take away some of S & P's credibility?  All I can do is shake my head with wall street, everybody knew this (downgrade) was coming  and yet everybody is overreacting and acting frantic once it came down officially (speculation driving).  I sure hope S & P's downgrade retains some credibility and pressures Washington to change their spending (printing ways), although Obama is probally right now trying to figure how to get more money for a stimulus package that in his mind will certainly save the economy?  I wander what will happen tomorrow??????????????????????????????

Dow Jones was down 1100+ points when Obama gave his speech today, and managed to comeback and close at a little over 600 under. That's not that bad, and it can be overcome. 98% of stocks traded on the NYSE closed in the negative today. It's more of a knee-jerk reaction if you ask me. We're still closing above 10,000 so I wouldn't exactly call this another recession just yet like some people are. It'll be interesting to see how this plays out though

 

[jason]

Correct me if I'm wrong, but I thought the stock market acted quite frantic in regards to the downgrade, I mean that was the main reason the Dow was down 600 and some points, and is also the reason the bonds did so well which in turn is why interest rates dropped a little more.  More insecurity in the market should make the bond market do better (low risk, supossedly safe?).  I'm not sure if I believe S & P was off by 2 trillion or not, maybe just Obama trying to take away some of S & P's credibility?  All I can do is shake my head with wall street, everybody knew this (downgrade) was coming  and yet everybody is overreacting and acting frantic once it came down officially (speculation driving).  I sure hope S & P's downgrade retains some credibility and pressures Washington to change their spending (printing ways), although Obama is probally right now trying to figure how to get more money for a stimulus package that in his mind will certainly save the economy?  I wander what will happen tomorrow??????????????????????????????

Dow Jones was down 1100+ points when Obama gave his speech today, and managed to comeback and close at a little over 600 under. That's not that bad, and it can be overcome. 98% of stocks traded on the NYSE closed in the negative today. It's more of a knee-jerk reaction if you ask me. We're still closing above 10,000 so I wouldn't exactly call this another recession just yet like some people are. It'll be interesting to see how this plays out though

Let it drop, time to buy.  I don't worry about the near future of the stock market, because I am going to be in it for the long haul, but I can understand the frustration people feel that are near retirement age or retired. 

If you look at the balance sheets of many of the fortune 500 companies, they have record cash reserves, but have hedged against spending it, waiting for a sign that the economy will see growth.  Until we can create jobs and significantly lower the unemployment rate, we are going to be stuck in this rut.

 

[nate53]

Dow Jones was down 1100+ points when Obama gave his speech today, and managed to comeback and close at a little over 600 under. That's not that bad, and it can be overcome. 98% of stocks traded on the NYSE closed in the negative today. It's more of a knee-jerk reaction if you ask me. We're still closing above 10,000 so I wouldn't exactly call this another recession just yet like some people are. It'll be interesting to see how this plays out though

Let it drop, time to buy.  I don't worry about the near future of the stock market, because I am going to be in it for the long haul, but I can understand the frustration people feel that are near retirement age or retired.  

If you look at the balance sheets of many of the fortune 500 companies, they have record cash reserves, but have hedged against spending it, waiting for a sign that the economy will see growth.  Until we can create jobs and significantly lower the unemployment rate, we are going to be stuck in this rut.

[/quote]  I agree it was a knee jerk, it was just that it wasn't necessary considering everybody knew it was going to happen, I'm not suprised, all the markets seem to act like this anymore. The grain markets see big swings about anouncements that have been talked about for weeks, but just the same when the announcement comes out it's one way or another in a big way.
Jason I agree with your whole post.  Mainly it's not good for the people who are relying on the markets for some income in the near future like retired or near retirement.  It's a good sign about the 500 companies.  It's not a time to sell for sure!  Dad always said buy low and sell high, it's harder than it sounds though.   Don't put all your eggs in one basket.  ALso can we pass a new law so nobody can use the word recession or double dip it seems to be catchy with wayyyy toooooo many people! ;D ;D ;D ;D

 

[knabe]

ALso can we pass a new law so nobody can use the word recession or double dip it seems to be catchy with wayyyy toooooo many people! ;D ;D ;D ;D

how about a new law not to use the words or concepts of stimulus and subsidy.  they are way too catchy with too many people.

 

[nate53]

ALso can we pass a new law so nobody can use the word recession or double dip it seems to be catchy with wayyyy toooooo many people! ;D ;D ;D ;D

how about a new law not to use the words or concepts of stimulus and subsidy.  they are way too catchy with too many people.

Know Knabe,  let's try and pass one that would have a chance. 

 

[knabe]

i wonder how many union members would pay dues if they were optional?

 

[SWMO]

For those that think that we aren't still in a recession and that this isn't the double dip that economist have worried about, you must not be in the retail world!  For a variety of reason July was one of the worst months that I have ever had.  I attribute this to several factors, THE EXTREME HEAT, our government waiting until the last minute to vote on the debt ceiling and locally the F5 tornado.

THERE IS NO CONSUMER CONFIDENCE.  Consumers are unwilling to spend the money that they have because they have no confidence in our government.

I also believe that those major corporations are playing a game of chicken with out government that they will win.  Corporations are unwilling to invest in America right now and I don't think that they will until the government reduces the corporate tax rate.  Otherwise their money will stay where it is, on their balance sheets. JMO

 

[garybob]

For those that think that we aren't still in a recession and that this isn't the double dip that economist have worried about, you must not be in the retail world!  For a variety of reason July was one of the worst months that I have ever had.  I attribute this to several factors, THE EXTREME HEAT, our government waiting until the last minute to vote on the debt ceiling and locally the F5 tornado.

THERE IS NO CONSUMER CONFIDENCE.  Consumers are unwilling to spend the money that they have because they have no confidence in our government.

I also believe that those major corporations are playing a game of chicken with out government that they will win.  Corporations are unwilling to invest in America right now and I don't think that they will until the government reduces the corporate tax rate.  Otherwise their money will stay where it is, on their balance sheets. JMO

The most commonsense reply to this thread, so far. How are the folks in Joplin doing, after the storm?

GB