Quote :

"WASHINGTON (AP) -- 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 the country'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 at the 11th-hour 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.""

http://finance.yahoo.com/news/SampP-downgrades-US-credit-apf-2107320979.html

8/5/2011 9:45:47 PM

8/5/2011 9:53:12 PM

8/5/2011 9:56:04 PM

this must be from the Onion. The president fixed this already. What better way to address debt concerns by adding more debt. bravo

8/5/2011 9:56:57 PM

Fuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuck.

8/5/2011 11:31:08 PM

so is the dow gonna plummet when it opens monday? Historically? back down to like 7k?

8/5/2011 11:49:51 PM

"game over man, game over"

8/6/2011 12:42:54 AM

"I for one welcome our new Chinese overlords"

8/6/2011 12:56:35 AM

I'll bet that somehow Obama manages to put the blame entirely on Dubya for this.

8/6/2011 1:03:48 AM

The wall street journal had an article about this that goes into more specifics on a few points:
http://online.wsj.com/article/SB10001424053111903366504576490841235575386.html

For example, the Treasury claims that S&P made a $2 trillion math error but went ahead with the lower judgement rating anyway.

And it mentions that S&P also had concerns about "the weakened 'effectiveness, stability, and predictability' of U.S. policy making and political institutions at a time when challenges are mounting" that factored into their decision... so apparently they don't trust congress very much right now.

Also, some more concrete numbers on precisely how much deficit reduction S&P wanted to see:

Quote :

" In recent warnings, the company said Washington should strive to reduce the deficit by $4 trillion over 10 years, suggesting anything less would be insufficient. Negotiations to reach that threshold collapsed, and political leaders instead agreed to a last-second deal to cut the deficit by between $2.1 trillion and $2.4 trillion, making a downgrade almost unavoidable."

[Edited on August 6, 2011 at 1:08 AM. Reason : .]

8/6/2011 1:06:42 AM

Quote :

"I'll bet that somehow Obama manages to put the blame entirely on Dubya for this. "

From the initial CNN banter it seems they're going to go for attacking the S&P's credibility. IE S&P sucks at math, S&P screwed up ratings during the sub-prime crisis, etc.

8/6/2011 1:21:58 AM

Yawn, AA is still really good. What are we fiscal nerds?


No, but in all seriousness, we are completely fucked.

But lol at the S&P the bastion of credibility just now getting around to this.

8/6/2011 1:25:52 AM

Quote :

"From the initial CNN banter it seems they're going to go for attacking the S&P's credibility."

which is kind of funny, because that would seem to say that even now their estimates are too high. I wouldn't hit that angle if I were them...

8/6/2011 1:33:45 AM

http://www.cnn.com/2011/BUSINESS/08/05/credit.rating.reaction.cnn/index.html?hpt=hp_t1

The comments are fun

Quote :

"comeonguys11 GO MITT ROMNEY!!! S&P says EVERYONE in Washigton needs to change how they do business and you respond with "it's not us, it's them." BRAVO!!! That's definitely the way to fix all this."

Quote :

"scion101 Obama literally put almost every program sacred to the Democrats on the cutting block, so long as there would be tax increases. It was the latter part that the Tea Party turned a cold shoulder on. No one's denying that there is a spending problem, but not allowing a needed increase in revenue is just as foolish."

Quote :

"tigrr CONGRESSIONAL CON JOB. BANKS AND CORPORTATIONS OWN THIS GOVERNMENT. THEY KNEW ANY DELAY WOULD LOWER THE RATING, AND GIVE THEM MORE PROFITS. SMELLS LIKE TREASON. AS JESSE VENTURA SUGGESTS = VOTE INDEPENDANTS, AND DUMP BOTH PARTIES."

Quote :

"CNNspinchanl RON PAUL CAN STAY"

Quote :

"amillion2one Hope and Change. Indeed, Obama got change... in the USA's credit rating. The S&P credit downgrade will be the death knell in his re-election campaign."

Lots of fans of caps

8/6/2011 3:04:43 AM

If you want to see some hilarity, check out somethingawful. Those nut-cases are all up in arms and pissed off at, not really one party or the other, CERTAINLY not the president, they're calling for the execution of, get this, the people who work at S&P...

Shit like "Sedition" , "treason" and "interference with democratic process" flying left and right. Im going to enjoy at least part of this watching those fruit-cakes shit the bed

8/6/2011 3:12:37 AM

What do you expect when many politicians were saying we should default before raising taxes.

8/6/2011 8:04:36 AM

^ people like you are just oblivious that you are part of the problem

8/6/2011 8:07:52 AM

8/6/2011 8:54:52 AM

Look, I can't be any clearer than this.

The people who are telling you the USA will be okay are either oblivious, in deep denial, or don't have your best interest at heart.

I've devoted a fair portion of the last three years of my life warning everyone I can about the impending disaster we're in for. I update my friends and family pretty much daily because I don't want to see them destitute and I damn sure don't want them mooching off me because I sacrificed to prepare myself.

2001 was the warning. 2008 was the fucking iceberg. This baby has been taking water ever since. It's time to start securing a spot on the lifeboat.

Ever heard the saying "How did you go bankrupt?" the answer is "two ways. At first very slowly, and then all the sudden."


When the mainstream media begins reporting this it will be too fucking late.


If you haven't taken steps to prepare yourself yet, you are in luck.

Europe is dismantling first so that will buoy our currency and economy for awhile which is going to buy us a lot more time than we'd otherwise have.

Once Europe finally goes bust (2012 in all likelihood) they will have a few dark years before they are ready to restructure. Once they restructure (as separate nations with separate currencies, the crazy Euro experiment is over) capital will flee this country at an unprecendented rate.

Look, this has happened to every society in history that has overextended itself with bills it can NOT pay.

Don't want to listen to me because I'm some anonymous message board poster (even though clearly I know what I'm talking about as I've been explaining this crisis as it unfolds for years)???

Fine. Do your own research. It's your life, and I'd think its worth an hour of your time to protect your friends & family as well.

Start with this article, okay? The internet has given a voice to brilliant men who would otherwise be shunned by the media because they don't engage in the kind of talking points that sellouts like Boehner and Obama try to brainwash you with on MSNBC and Fox News every night.

Seriously, just read the fucking article.

http://www.theburningplatform.com/?p=19454

8/6/2011 9:12:44 AM

8/6/2011 9:38:43 AM

^^
I'm not going to counter all of your doom and gloom talk, but I did have a question.

Considering the average age of the people on this board..lets say 25ish..are you not convinced that we can ride out the "end of the world" and be in a more stable environment 30-40 years from now, when this news is much more important as we begin the transition to retirement?

Also, I know S&P doesn't have the best reputation considering they were giving high grades to the stupid banks that were responsible for the housing bubble, but I think it's a little telling that we lost one as easy as it was for them to give out those easy A's. If they got smart and decided to make up for their past idiotic policies of propping up institutions and governments that didn't deserve it, more power to them.

[Edited on August 6, 2011 at 9:43 AM. Reason : .]

8/6/2011 9:42:56 AM

Quote :

"It's time to start securing a spot on the lifeboat"

So waht should we be doing right now?

8/6/2011 9:57:35 AM

People's retirement funds are going to get wiped out, more middle class will become poor, but that's nothing new. In the long run though, the US economy will be fine. It's all about infrastructure. I can order a vacuum cleaner off amazon.com and have it on my doorstep in less than a day. That's not going anywhere. Come on.

8/6/2011 10:38:35 AM

^um oil prices?

8/6/2011 11:52:46 AM

Quote :

"In the long run though, the US economy will be fine. It's all about infrastructure. I can order a vacuum cleaner off amazon.com and have it on my doorstep in less than a day. That's not going anywhere. Come on."

That's actually the scary part. As the global ponzi dies a grisly death and the USD loses its reserve status, the cheap, foreign-made goods are going to go up in price and become less accessible. We are living in a time where a major geopolitical shift is taking place. U.S. hegemony is already done, and Russia/China are forming an unholy alliance as we speak.

The good news is that if the people here (and, as a result, the leaders) are taught what got us to this point, we can rebuild a structurally sound, productive economy. If the people are duped into believing that this was all a result of the unfettered free market, then we will descend into an era of unprecedented tyranny. Luckily, I think the tide is moving in a positive direction.

8/6/2011 12:05:55 PM

Once we lose reserve currency status, we can do this http://en.wikipedia.org/wiki/Brazilian_real.

I don't think the debt is the worst problem in the world. If we magically got rid of the debt, I still think we should be concerned about the fundamental ability of our economy to produce worthwhile goods and services.

There's the financial economy and the real economy, and it used to be that the financial economy existed to get money to the real economy to fund productive enterprises. Now, the financial economy dwarfs the real economy and is an end unto itself.

This has hurt the real economy because, now, people are flocking to jobs and activities that only fuel the financial economy. On top of that, the financial economy imposes dysfunctional behavior on the real economy, such as encouraging companies to only care about quarterly results instead of making long term investments.

The real economy grows by expanding who we sell to and by taking less effort to produce the same amounts of goods and services. That's all about technological growth.

It's the job of financial economy to serve the real economy by providing money to upgrade technology and to invest in long term research. It is NOT the job of the financial economy to allow us to consume more (This was only ever the case ASSUMING that consumption fueled the upgrade of technology. Our consumption is fueling technological upgrades -- just not here. This is why China is willing to take our weakening currency in exchange for their technological growth. They gain more in the long run, we gain more in the short term).

If the current financial economy cannot do its job, then it needs to be fixed or scrapped and replaced.

8/6/2011 12:33:00 PM

I agree with pretty much everything you just said. One of the real problems is how people have been funneled into career paths that are necessary (currently), but don't produce anything worthwhile. There are many jobs that just exist to navigate the tax code/abundance of regulations. We've also got a ton of soldiers, for instance, with skills that don't readily transfer into civil society, except for maybe into police work, but police aren't something we need more of right now - and certainly not the type that are accustomed to busting down doors.

8/6/2011 12:44:51 PM

Quote :

"I still think we should be concerned about the fundamental ability of our economy to produce worthwhile goods and services."

You seem to fail to realize two of the fasting growing companies are American right? Both Google and Apple are steadfastly American.

Quote :

"There's the financial economy and the real economy, and it used to be that the financial economy existed to get money to the real economy to fund productive enterprises. Now, the financial economy dwarfs the real economy and is an end unto itself."

What are you talking about? Finance is a very small sector of the US economy:

Quote :

"in exchange for their technological growth"

People want LEDs, IPhones, Android tablets, those are our technological growth.

8/6/2011 1:25:27 PM

Quote :

"Yawn, AA is still really good. What are we fiscal nerds?"

Exactly. Still got dat 100% investment grade debt.

What're you gonna do, buy euros? Buy yen? Buy gold, which always yields 0%?

Iceland went bankrupt, cut the fat, gave a middle finger to Europe and now are borrowing at 5%. I think we'll manage.

8/6/2011 11:15:21 PM

^^ not that I'm questioning your graph or the point it is trying to make, but what is that showing? dollars? workers? number of companies?

8/7/2011 1:29:50 AM

I think it's unicorns.

8/7/2011 1:43:22 AM

S&P has released an official statement on the matter: https://www.youtube.com/watch?v=hSBdEPontd4#t=01m02s

8/7/2011 10:32:28 AM

It's pretty obvious that this downgrade wasn't based on any kind of economic math. If it had, the other credit rating agencies would have followed suit. They didn't. Most them reaffirmed that US treasury bonds are still the safest investment on the planet. Now, tossing aside the debate over the S&Ps credibility ( they don't have any), this downgrade was based on lack of faith in our government. Their statement said as much. It was based on concerns that if 30% of our representatives seemed ok with defaulting, that they could actually let it happen one day. It's the Tea Party's fault, 100%.

8/7/2011 10:57:50 AM

Quote :

"Buy gold, which always yields 0%?"

That makes no sense. The only thing gold yields 0% in is gold.

The level of absurdity in some of these previous posts is off the charts. If you invested in 10 year treasuries in 2001, you got killed in real terms. If you bought gold, you've made a killing. It's been entire decade of irresponsible monetary policy.

8/7/2011 12:56:59 PM

Quote :

"It was based on concerns that if 30% of our representatives seemed ok with defaulting, that they could actually let it happen one day. It's the Tea Party's fault, 100%."

Right. But only if you ignore the Keynesian ponzi scheme of the last 50 years that got us to this point. Other than that, you're 100% correct. We didn't have a debt problem in the US until sometime after the 2010 election. After that it all went to shit.

8/7/2011 1:02:09 PM

Quote :

"But only if you ignore the Keynesian ponzi scheme of the last 50 years that got us to this point."

lmao

8/7/2011 2:42:16 PM

^^ so do you get more mad at the friend that keeps promising to pay you in full but just doesn't come up with enough and keeps falling behind or the friend that says "fuck you i ain't paying shit, i am too far in debt i got to get my life straight before i even attempt to pay you..."

8/7/2011 2:50:23 PM

Quote :

"If you invested in 10 year treasuries in 2001, you got killed in real terms. If you bought gold, you've made a killing. It's been entire decade of irresponsible monetary policy."

Agree on all counts. But unless you can go back in time and invest in gold, that information is useless. People will continue to buy US debt. US still has the largest economy with the greatest ability to repay its debts.

My only point is that the debt downgrade, like the debt ceiling, is a lot of media hyperventilating.

Quote :

"30% of our representatives seemed ok with defaulting"

Can we please stop regurgitating this? Our revenues would have easily covered payments on public debt several times over.

8/7/2011 3:30:30 PM

^^ I'm not justifying or agreeing with the Tea Party reps, I'm just saying it is asinine to blame them 100%.

8/7/2011 4:00:59 PM

but rachel maddow says theyre "lol"

and the daily show calls them "lol"

and teh colbert

i mean they were only elected legitimately by the same people who are going to cause obama to lose in a landslide! what a joke they are!

[Edited on August 7, 2011 at 4:21 PM. Reason : theyre also "disconcerting" according to harry reid]

8/7/2011 4:19:36 PM

^ only if they had kept their Tea Bagger name we would not be having this discussion.

8/7/2011 4:58:40 PM

hey fox news fans,

what the fuck did they hope to convey with this graph?

8/7/2011 5:12:09 PM

What the fuck is with that graph?

8/7/2011 6:15:45 PM

oh so wait AA is a downgrade. ohhhhhh. thanks, fox news.

8/7/2011 6:53:57 PM

Quote :

"We've also got a ton of soldiers, for instance, with skills that don't readily transfer into civil society, except for maybe into police work, but police aren't something we need more of right now - and certainly not the type that are accustomed to busting down doors."

I think that's a bit of an exaggeration. Combat arms, engineers and MP are only about 1/3 of the total military. The rest are involved in vocational tasks and logistics operations that are transferable to the civilian world.

Otherwise, agree with all the other points made, particularly the dysfunction in an economy based on the finance sector and that the S&P downgrade being more a political judgment than a financial one.

8/7/2011 7:32:31 PM

Quote :

"I think that's a bit of an exaggeration. Combat arms, engineers and MP are only about 1/3 of the total military. The rest are involved in vocational tasks and logistics operations that are transferable to the civilian world."

Even if you're right, 1/3 of the military is still a ton of people. What happens when you drop individuals that are literally trained to kill into a civilian population where jobs are hard to come by even for highly educated folks?

It's just another externality of war to consider. A long-term consideration to be made is the mental/physical health problems of these soldiers that will only get worse with age.

8/7/2011 7:37:56 PM

^^I just proved that our little of our economy is finance

^We made it by after WW1 WW2 and vietnam where we had far a far larger percentage of our population leaving the military and entering the civilian workforce, we survived then didn't we?

8/7/2011 8:26:23 PM

I shit you not foxnews all weekend has been saying something along the lines of "S&P warns they will downgrade the US if the government doesn't follow through on tax cuts." I shit you not I heard it at least three times from anchors.

8/7/2011 8:57:09 PM

Not that we as a country don't deserve this, but these were the same people that said CDO home loans were AAA rated, and look how that turned out.

I don't have any personal respect for contrived banking industry ratings, or the banking industry in general, the whole sector can burn as far as I'm concerned.

8/7/2011 9:13:13 PM

^^Fox is right, they were demanding tax cuts

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DUS_Downgraded_AA%2B.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243942957443&blobheadervalue3=UTF-8

Quote :

"Rationale We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process."

Quote :

"The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options."

Quote :

"Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act."

8/7/2011 9:28:01 PM