The United States has lost its coveted top AAA credit rating

[Gringamuyloca 47]

S&P issues unprecedented downgrade of US credit rating, saying debt package falls short

mmm.. it will be interesting/scary to see how the rest of the world responds to this first ever 'fall from grace'.

[Easy Bakes 253]

Hmm 2 trillion dollars in debt and a lousy credit rating?

sounds fair to me.

if you cant borrow any more maybe you will find other solutions to get out of debt.

[Ocram's Razr 964]

I expected it when they called a lowered increase a cut in spending. Our politicians really screwed us all over. The bad thing is they most likely have savings in precious metals.

[Easy Bakes 253]

Every tried to buy gas with a gold bar?

[mrbisonm 1,622]

'fall from grace'

Well, it is sad , but somehow expected that the US will loose their plumes one day, I actually never thought that it would happen in my lifetime, but it seems that the decend from worldpower in every way started.

My grandfather who fought WW I once told me back in the sixties, when I was a pre-teenager, the story of the roaming and powerful civilization that descended down to little or nothing with time. "Everything that goes up must come down"....he told me, and with time I learned that he was right.

It happened since the beginning of time, and not only with mankind, but also with the animal kingdom (dinosaures) Plantlife (giant ferns etc) and the (our and/or any) planet itself. Nothing is eternal. Nothing!

Civilizations like the Vikings, the huns, the mongols, the Inca and Atztecs, then the Babylonians, the Ottomans, Egyptians, the Persians, the Romans and more. Let's not forget the more modern worldpowers and Glories, such as Napoleon, the British, Russia, Germany with Hitler and now the United States. They all had their glorious time, or what I call their 5 minutes of Glory, and there were many more. But unfortunetly, everything has an end and I seriously think, that's the beginning of the end for the US.

Makes me thing that I would not like to have my own moment of Glory myself and rather stay in the shadows and live fully to my end.

What happens worldwide and especially to the US was expected and probably due. Who's fault it is or who/what is behind this is not certain, but everyone is pointing to the other, that's for sure. The US is so deep in debt at the moment, most probably because of abuse and warfare, which never really helped any civilization since mankind's existance. Look at the history of us, those who have conquered, fought and plundered, taken profit of others and making war sometimes only for gaining the riches of the other (Food, Gold, Oil , Water etc) has never given anything positive to the Winner. So, why do we call them Winners then, when they loose everything anyways? I don't know.

Let's not hope the worst for anyone, but maybe we can do all something together and be less agressive and greedy, which will surely make this place a better world for all.

I know that there will be another world power or Glorious civilization elsewhere soon. Will it be China, United Europe or another nation? I only hope that THEY will finally have learned from the past, that being the first is NOT the very best thing to be......

That is my view and logic of what is happening in the world today, after having read the article in the link by Gringamuyloca.

Good luck America!

mrb/ Fred

  Edited August 6, 2011 by mrbisonm  

[Follarch 327]

So you believe that the United States of America, as a nation is going to crumble to nothing more than a poor, unstable state? I don't really see what the big deal is about this credit rating. (They even said it was just a notch down to AA-plus) The economy is what a group of men came up with. A man holds something up in his hand, takes a look at it, says it's worth 5 bucks, and there it is, in the eyes of the world market, that item is now worth 5 bucks, no more, no less. Our entire economy is because of what it's been said it is. Isn't that just so...remarkably stupid??

But I don't believe this little lowered credit rating will have much impact on the populace. Sure the figureheads in office will spin their heads and go "omgwut", but the people won't think much of it at all.

America will still be here, the world will still be here, the people will still be here, and what little money i have in my wallet will still be here. lol

P.S. I'm not even going to get into my idea for an Economic reform. People just laugh at me.

[astronelson 339]

Negative outlook, too. You're now on par with Belgium (Negative outlook) and New Zealand (Stable outlook). Don't worry, you still have AA, AA-, A+, A, A-, BBB+, BBB, and BBB- to fall through before you're classed as "non-investment grade".

Greece is all the way down at CC, with a negative outlook. I don't think they're going to get better for a while.

[Duke87 1,070]

It's ridiculous, of course, that this hasn't happened sooner and that the other two raters aren't doing likewise. I personally consider US treasuries to be junk bonds and won't be buying any. Just because a default hasn't happened yet doesn't mean it won't. It pretty much inevitably will have to sooner or later. Then we'll see how much everyone's "safe" US treasuries are worth.

As for what this means... well it isn't a good thing (seeing the market this past week, that second dip people have been talking about seems to be upon us). But since it's never happened before, nobody really knows yet what it means. It could be huge, or it could not mean much of anything (until the rating drops further, anyway). Some institutions are only allowed to have AAA rated bonds and would need to stop buying US treasuries by this measure... but then again, the rule actually often says "AAA or US", so it doesn't make a difference for them.

[A Nonny Moose 8,263]

Sometime late next week will be a good time to buy into the market. Seems some kind of sell off started Thursday last as the weak sisters and home traders went into panic mode. Investment is for the long haul. Anyone who has read Pearl Buck's The Good Earth can't help but agree with Wang Lung that the "land is always there".

People who try to make a quick kill in the market are likely to be quickly killed. I hate speculators and people who develop "derivatives". It is some kind of death wish.

As for the drop in rating from AAA to AA: So what? What I am expecting is that these drops will continue unless the congress gets their thumbs out and their act together. Since people in the congress are bullet proof once they have been installed and don't have to give a rat's patootie for what their constituents think, they can hoe to the Party line and stay relatively safe until the next election. This time, they had better hope that memories are short. Politically they usually are.

Obama has said, over and over, that the congress is dysfunctional. He is right. They are supposed to be thinking of the welfare of the whole country, not the political theory of their party. The GOP should be ashamed of its self. Now they have damaged the international standing and good opinion of the United States of America. Is it that the Republican Party wants to go down in history as the party that started the slide of the United States into irrelevance? They are certainly doing a good job.

[mrbisonm 1,622]

America will still be here, the world will still be here, the people will still be here, and what little money i have in my wallet will still be here. lol

Of course America will still be there tomorrow, I didn't mean that it will disappear in our lifetime and it will always be there, like Napoleon, Caesar, Ghengis Kahn and Cleopatra. All that will happen slowly, as it has been done with ALL the other civilizations before. I only said that the credit problems with the US are probably the bginning of what I mentioned above, or... at least that's what I think.

To be honest, I have no hope, that they will find a way to come out of their financial problems as quick and easy as wished for.

I do a lot of buissness with the US citizens, almost 50% of my revenu used to come from them in the seventies, eighties up to the mid nineties, but I saw it change dramatically after the Millenium, for the worst for them and for me. Today only about 10% of my income come from the US, mostly the folks from the higher societies, musicians and actors. (btw, I design, sell and build traditional/original loghomes)

Who would have thought that Greece would drop so far down one day, Portugal and soon the US? Will Germany be the next, I hear from my family overthere, that things are going too well there neither and that the falling of the Berlin wall and the changes to the Euro currency didn't help neither.

One way or the other, changes are in the air, if we like it or not. It will not affect me and my family, hopefully not, even if the worst will happen, but it will be for the new generations that will try to keep the head out of water.

mrb

[Meg 368]

Obama has said, over and over, that the congress is dysfunctional. He is right. They are supposed to be thinking of the welfare of the whole country, not the political theory of their party.

That is the point many of them have missed. The have been so busy scoring political points against "the opposition" that they don't seem to care what damage is caused in the process. I wish they would grasp the point that "the opposition" is al qaeda and that ilk, not the other political party.

The GOP should be ashamed of its self. Now they have damaged the international standing and good opinion of the United States of America. Is it that the Republican Party wants to go down in history as the party that started the slide of the United States into irrelevance? They are certainly doing a good job.

In their minds, they have proven that it's all Obama's fault because it happened on his watch.

[Gringamuyloca 47]

Unfortunately (IMHO) we are all to blame for the mess we're in. For some reason we balk when it comes to paying our fellow countrymen/women a good wage.

We all want to MAKE a good wage... but on the other hand, we shop at Walmart and other similar stores that get everything 'cheap' out of China, India, Vietnam etc... (Walmart has put more local manufactures out of business... but that's a whole other topic.. or is it?)

If we were willing to pay a little more to our neighbour down the street, the money would still be here.. in our country... paying for our schools, bridges, policing etc... instead, we have taken it out of our economy and China, India etc.. are building new roads, schools etc, with OUR hard earned money.

We won't get out of this pickle as long as we want something for nothing (or as little as possible.)

If we make a habit of supporting people who work in our own town, state / province, country, we will slowly improve our lot...

We really have gotten exactly what we've(not) paid for...

  Edited August 6, 2011 by Gringamuyloca  

[A Nonny Moose 8,263]

Unfortunately the western labor force has priced itself out of the market. By demanding more and more for the same or less work year after year, they have fueled an inflationary spiral, and have finally broken the machine with this positive feedback loop. Companies go off shore for labor because local labor won't work for the kind of money the industry can afford and still stay viable.

Not only that, but local labor insists on purchasing all the foreign junk because it is cheaper than local goods. They have damned themselves by their own cupidity. They have made their bed and now, perforce, must lie in it.

Next time some big company's work force goes on strike for more and more while producing the same or less, I hope the plant is closed permanently. The only way you'll get the attention of this mule is with a two by four straight between the ears.

The watchword for today is: If you always do what you've always done, you may no longer get what you've always got.

  Edited August 6, 2011 by A Nonny Moose  

[krbe 193]

We all want to MAKE a good wage... but on the other hand, we shop at Walmart and other similar stores that get everything 'cheap' out of China, India, Vietnam etc... (Walmart has put more local manufactures out of business... but that's a whole other topic.. or is it?)

No, that really is the topic. The entire global economy is built on the exchange of money for goods and services. Export / import is a good thing in general. However, bad financial things can happen when two parties compete on two different platforms, such as when China, with its vast labour reserves and benefits of scale "always" will be able to undercut almost any competitior, whether it'd be the markets on which the goods are sold on, or another country which should have better conditions (i.e. lower cost base / lower labour costs).

Thanks to the WTO and "most favoured nation" status the US cannot treat China any differently than say Germany, even though those countries are vastly different as in terms of what is imported from them and why.

Also the consumption "mind" of the US economy -- as opposed to investments -- isn't benefitting the US and other countries with a similar wage / production picture.

As a sidenote, it can be mentioned that I work in a business supplying the construction industry in Norway. Where businesses earlier exclusivly bought expensive and durable high-end tools from for example the United States, Germany, Switzerland and Japan ("investing" in them), some businesses are now buying cheap, low-end tools from China for each new project and billing the customers for all products used on their projects (merely "consuming" them), and discards them when finished if they're still usable (after all, it's the customer that has bought them all...).

  Edited August 6, 2011 by krbe  

[Gringamuyloca 47]

Well said Nonny Moose!

There ARE 2 sides (and an edge) to every coin in my pocket!

One thing I have noticed in my years on the planet... Life is a pendulum: swinging back and forth, from one extreme to the other. Life seems to get this little 'lull' as we get towards the 'middle' of the arc... and end up complacent, as Mrbisonm stated eloquently above.

Life will go on... it always has... hopefully we'll come out of this with more people with food in their bellies and roofs over their heads.. instead of less.

edit: @ Krbe I missed your post

If we can't see the same value in our next door neighbor as we want for ourselves.... it's going to be a very strange feeling when work from overseas is outsourced here... because the labour is 'cheaper'.

  Edited August 6, 2011 by Gringamuyloca  

[A Nonny Moose 8,263]

The global village trades and the goods move on. The money flows in, and sometimes stays in one place. We have to remember that money is an idea, not a thing. The stock market is an expression of faith in this idea. When people lose faith in large numbers, they flee to specie (metal, jewelry), and the market crashes. People caught unawares effectively lose everything if they were buying on margin because the margin calls will be beyond their means and their stocks will be sold at market (low, by now) to clear the debt.

It is all very simple. Don't put any money in the market you cannot afford to lose. Don't buy on margin, however tempting it may seem. Putting money in the market, even after the most careful research is no different than backing a horse in the fifth race. There is always a chance it will come fifth.

We all hope that the myth of money will hold up while we live. If there is another solution, the people in Star Trek have never explained it.

[Easy Bakes 253]

invest in a fire proof mattress.

[hym 358]

Obama has said, over and over, that the congress is dysfunctional. He is right. They are supposed to be thinking of the welfare of the whole country, not the political theory of their party. The GOP should be ashamed of its self. Now they have damaged the international standing and good opinion of the United States of America. Is it that the Republican Party wants to go down in history as the party that started the slide of the United States into irrelevance? They are certainly doing a good job.

Claiming this is the fault of the Republicans is as moronic as claiming it was solely the Democrats' fault. This problem has been brewing for decades and both Republicans and Democrats have chosen to ignore the problem for the sake of political expediency.

[Meg 368]

Claiming this is the fault of the Republicans is as moronic as claiming it was solely the Democrats' fault. This problem has been brewing for decades and both Republicans and Democrats have chosen to ignore the problem for the sake of political expediency.

It depends on what you are talking about: reality or perception. We know that you are talking about reality.

But, the actual credit ratings are based on perception. If they were based on actual math, the country would have been downgraded long ago.

The perception is that Congress considers political brinkmanship to be more important than actually accomplishing anything. and they made sure that the whole world knew about it. That is what inspired the downgrading.

[hamsterTK 93]

We all hope that the myth of money will hold up while we live. If there is another solution, the people in Star Trek have never explained it.

I think it would involve something like machines harvesting energy and materials for "free" and then replicating any object using a set of instructions. Information would be reproduced, and in this utopia there would be no traditional copyrights. Actually you would be forced to share.

Individuals would be allocated an equal amount of raw resources and a replicator. Then you'd download programs for free to make whatever you desire. The motivation to create these object replication programs would be to obtain something that nobody has made yet, or to maximize the value of your finite ration of resources.

Maybe some people could sit back and live on other people's creations, but there would never be a situation where everyone is unproductive because then the scarcity of desirable things would drive people to make stuff.

I guess creating this perfect system and allocating resources equally, as opposed to a greedy elite taking it all, is complicated. Maybe it requires some kind of totalitarian system and mind control, who knows we are talking about the fricken future...we'll be ruled by some kind of post-singularity electronic deity that exists as a cloud of invisible nanobots or something.

In Star Trek, maybe you earn your entitlements by serving as a red shirt?

When you think about it, isn't that how Simtropolis works? There have been almost no example of paid custom content for SC4. BATters put lots of time and effort into creating things, then they are distributed for free. The motivation to create stuff in the absence of money is to make stuff you want. Notice how people who make thing around here don't really take requests and their creations are often personalized?

  Edited August 7, 2011 by hamsterTK  

[A Nonny Moose 8,263]

In capitalistic terms, the United States has reached Peter's Pretty Pass. It has been promoted to its level of incompetence, and, realizing it can't be promoted again, needs to make a lateral shift to a new position. Unfortunately there is no new position. Because of the globalization of our society, everyone is pretty much in the same boat except some of the eastern countries who are busily trying to catch up, and taking advantage of the situation while they quickly approach the same limit.

The current financial impasses are trending to a general equalization of dissatisfaction, with the resulting displacements. People are going to have to lower their expectations in the western world, and take less. The wage-demand driven inflationary spiral has finally damaged the economic machine, and the bubble, if it hasn't already, is about to burst. Unlike a certain company that is bullish on America, I am seeing bears everywhere. Having tangled with that outfit in the past, I can assure you that they are just as driven by the Mammon imperative as the rest of us.

I am sorry to say that this big crash is likely to come about in my lifetime. It will mean that I will have lived from Depression to Depression. (There!, I've used the D word.)

It is the result of a theory proposed by C. L. Dodgson in Alice in Wonderland where you have to run faster and ever faster to stay in the same place. Look at the rate of acceleration of our current society. (I'll bet you thought that Alice was a children's book.)

[Easy Bakes 253]

Wonder if they will bailout GM and every one else they bailed out before again when their stocks go in the tank again or will they have learned that lesson since it was only a few years ago.

[Duke87 1,070]

There will be no bailouts this time. No way anything like that is getting past the house with its current makeup.

[A Nonny Moose 8,263]

Correct. They shouldn't even consider it. Look what it got them the last time. Moody's will have the bonds down to Junk if they do that.

S&P are still talking about a further downgrade.

Shoveling money out of the Capitol rotunda just devalues the currency.

UPDATE: 1311 this date. The slaughter continues.

This will raise hell with the mortgage market and mortgage holders. A new housing crisis looms.

UPDATE: 1825 this date

The Dow-Jones industrial average dropped 634.76 points today.

For all the assurances by Obama (and what else could he do) the world markets are reacting to the general loss of confidence.

Overall a drop of 5 to 7%, and if this continues tomorrow, it may trigger a panic. Of note is a slight rally on the Dow around 3 p.m. but the downward trend continued to the close.

FTSE dropped 178.04; DAX lost 312.89. These are relatively large losses as the excahanges are smaller.

  Edited August 8, 2011 by A Nonny Moose  

[dchotzen-hartzell19 34]

I think credit rating agencies are a scam. The senate banking committee is investigating S&P. They only have 100 evaluators.

[Ocram's Razr 964]

No one should have any faith in the global economy or the ability of governments such as that of the USA to deal with money but that does not mean people cannot make money in bad economy. The problem with the stock is that it is comprised of a vast mob mentality of people with wealth.

[A Nonny Moose 8,263]

One of the nice things about the market is that you can join the party with quite limited funds. It is just a matter of care. A couple of thousand dollars that you would otherwise blow elsewhere will get you in with a few good selections. This does require some research however, just like being able to read a racing form.

Today, after an early rally, the Dow-Jones has dumped early gains on the announcement from the Federal Reserve. I'd say the market is nervous. The ticker has it at down 23 points at 1509 and up 53 points on the day 15 minutes later. Touchy or what?

The big problem in recent days has been the clear evidence that the congress doesn't give a damn. Why they should be looking at S&P after all these years is just window dressing to try an put some spin on their stupidity. Just political posturing.

  Edited August 9, 2011 by A Nonny Moose  

[hym 358]

I think credit rating agencies are a scam. The senate banking committee is investigating S&P. They only have 100 evaluators.

Where does this logic come from? Lenders aren't there to be your friend; they are in the business of providing liquidity, and they need to know whether it makes sense to risk their money on you or not. That is the purpose of credit rating agencies. They provide the lenders a way to know if you deserve to get credit or not.

[Duke87 1,070]

The senate banking committee is investigating S&P.

Like a drunkard that just got his booze taken away...

Seriously, you idiots - it isn't S&P that has a problem, it's YOU.

[EyeofMobius 27]

What I find interesting the most out of all of this turmoil and political bickering is that the US population seems to be lying down and taking it while other nations are having flare-ups of anarchy.

In school here when we first started to learn about how the US government works in comparission to our own was the US Debt figure at the time way back in the early nineties. I just remember a foreboding sense of perplexion and dumbfoundedness over it.