Today's Coming Crisis Movie

Wednesday, August 10, 2011

America's Crisis Of Confidence Begins

After the close of markets last night, Standard & Poors (S&P) announced that U.S. debt would no longer carry a AAA rating. From Bloomberg's U.S. Loses AAA Credit Rating as S&P Slams Debt, Politics—

Standard & Poors downgraded the U.S.’s AAA credit rating for the first time, slamming the nation’s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits.

S&P lowered the U.S. one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based firm said yesterday...

“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 to a degree more than we envisioned when we assigned a negative outlook to the rating,” S&P said.

S&P put the U.S. government on notice on April 18 that it risked losing the AAA rating it had since 1941 unless lawmakers agreed on a plan by 2013 to reduce budget deficits and the national debt. It indicated last month that anything less than $4 trillion in cuts would jeopardize the rating.

The downgrade was the final straw in a week which I believe the world will long remember. It would behoove those who can not accept the obvious facts of America's decline to think about what happened last week. Our political "leaders" proved beyond any doubt that they are just as short-sighted, self-serving, dysfunctional and corrupt as I have repeatedly said they are. It's a wonder the U.S. credit rating is not BBB+, or worse.

The stock market fell all week long, with the DJIA losing 10% of its value on Thursday. On Friday, the stock indices went up & down like a yo-yo. Nobody knew whether to buy or sell. For investors, there was nothing to hang your hat on. The endless crisis in Europe seemed to be getting worse, the economy obviously sucks, and everyone knew a downgrade was coming. And then S&P lowered the boom. Those holding equities will have all weekend to think about the safety of their money. (more)