US loses AAA credit rating

S&P downgrades US AAA credit rating:

http://www.bbc.co.uk/news/world-us-canada-14428930

Just saw it on BBC this morning.

I'm sure many foolish people are going to blame Obama, while ignoring the Republican a**hattery that got everyone in this mess in the first place.

Well this will most likely mean the dollar will take a nose dive...Great!

"The agency said the deficit reduction plan passed by the US Congress on Tuesday did not go far enough."

Who are these people, and how do they cook up these things? Is it an algorithm? Or a bunch or guys in a room wheeling and dealing? I feel the same about Mervin King, that he exerts too much political power with little to no oversight. They are obviously influencing processes which in a democracy should be left to the people.

They are obviously influencing processes which in a democracy should be left to the people.

The same "people" of whom 24% believe Obama is not American? Of whom only 39% believe in evolution? Of whom 90% can't find Afghanistan on a map? I've read that this credit rating downgrade will result in at least a 10% loss in most Americans' 401Ks. This was the result of the (elected) Republicans and the Tea Party playing chicken with the U.S. Economy during the debt ceiling negotiations, which they did so they could cut money from Medicare. Great work guys. Elected people will always have some kind of agenda. The Dems aren't any better. Look at the cowardly way they just caved in. I'll take my financial advice from qualified economists and bankers thank you very much.

S&P is only one of 3 ratings agencies. The other 2, so far, are keeping things the way they are. The ratings agencies themselves (and possibly S&P in particular?) do not have stellar reputations themselves right now as they didn't do anything during the 2008 crash and continued to rate bad banks (the ones selling the subprime mortgages) as good (I may have that somewhat incorrect, but that is the jist).

That said, the press release that S&P issued seemed to largely focus on the partisan brinksmanship that dominated the debt ceiling fiasco and some talking heads last night (I was up when the news broke) were saying that this is almost a political slap on the wrist rather than anything else.

Ezra Klein has a short analysis of both sides of the theorizing:

http://www.washingtonpost.com/blogs/ezra-klein/post/2011/08/05/gIQAx4NKxI_blog.html?hpid=z1

Holding faith in democracy is tough. Think of it this way....intelligence is distributed like a bell curve....so if you strike a line down the middle you find that half the people are of below average intelligence (you statistics nuts will have my head on a pike for that). But then you have a whole lot of people who will proudly state 'I don't like politics/economics/whatever'...and they vote anyhow. On what do they base their decisions? Some vague 'morality'? Some sort of self-concocted 'common sense'. Many hold beliefs and values simply because of the views of their parents....

Trem I am with you - let the smart folk work it out.....but I've met a few smart guys who would steal the shoes off your feet.

The point with the credit agencies is that they aren't the smart guys, or at least they aren't the smart good guys. Their salaries are paid by banks and funds and such. That's who they answer to. Trem points out that some say this is more of a 'political slap on the wrist rather than anything else', which is terrible. That's exactly what they shouldn't be doing. These guys are almost exclusively right-wing. 

From what I understand, the downgrade is largely due to Congress' unwillingness to consider any form of increases to tax revenue, even as a last resort to avoid default.  The fact that the House couldn't pass an already-weak compromise bill simply because it increased revenues is worrisome for our creditors.

On a side note:

This whole Tea Party thing is just daft, when the original tea party was about taxation without representation.  The founding fathers were all for taxation to pay government debt, just not taxation to line the pockets of King George.  After the revolutionary war, there were huge war debts to pay off.  How did they do it?  Monetary policy and taxation, just like every government until Bush 43, and that includes Reagan and Bush 41.  How did we get out of the Great Depression?  Government spending on public works and heavy industry to support our allies in the run-up to WW2.

But I guess that's what happens when you slash education spending: people don't know things.

From what I understand, the downgrade is largely due to Congress' unwillingness to consider any form of increases to tax revenue, even as a last resort to avoid default.  The fact that the House couldn't pass an already-weak compromise bill simply because it increased revenues is worrisome for our creditors.

On a side note:

This whole Tea Party thing is just daft, when the original tea party was about taxation without representation.  The founding fathers were all for taxation to pay government debt, just not taxation to line the pockets of King George.  After the revolutionary war, there were huge war debts to pay off.  How did they do it?  Monetary policy and taxation, just like every government until Bush 43, and that includes Reagan and Bush 41.  How did we get out of the Great Depression?  Government spending on public works and heavy industry to support our allies in the run-up to WW2.

But I guess that's what happens when you slash education spending: people don't know things.

This. All of it.