It would have been helpful if the S&P had provided some thinking on this critical issue. S&P was willing to take on the entire legislative part of government. But they didn't have the balls to take on the Fed. Interesting
We have just a few months before the next explosion. S&P has put the US on a negative alert. Meaning further downgrades are going to happen if the US fiscal house is not put in better order.
Folks, that CANNOT HAPPEN without substantial cuts in both Medicare and Social Security.
So over the next few months when Harry Reid and Nancy Pelosi tell us that there will be no cuts to these mega programs, respond by immediately shorting the stock market. If Obama sticks in the mud and says, “We will not cut SS” the Dow will fall 500 points.
Face it Krugmans of the world. Keynesian economics has hit its limit. You can’t spend your way out of this problem. That door is now closed.
If there is a silver lining to the S&P action it is that mainstream economists on both coasts of the US (but not Chicago) have also been downgraded. The notion that Debt = Growth is now a dead concept. I couldn’t be happier.
The bond-rating houses kept saying all along that they weren't worried about the debt ceiling not being increased. Rather, they were worried about the long-term prospects of the U.S. government paying back $15-plus trillion, which is where our national debt (both publicly held and obligated to trust funds) will be shortly.::::::::::::
Because last weekend's deal didn't cut spending deeply enough, S&P has just downgraded us. We'll see just how disastrous this becomes -- some are arguing it's not such a big deal -- but consider this the market's revenge for TARP and the stimulus package. You run up the debt, Mr. President, you lose your good credit.
LATimes, China said:
China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets...China is dictating conditions.
If no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way...
Michelle Bachman requests the resignation of Tim Geithner:
Tonight’s decision by S&P to downgrade our credit rating to AA+ is a historically significant and serious event for the United States. The United States has had a AAA credit rating since 1917. That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11. This President has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling.::::::::::
“We were warned by all of the credit agencies that a failure to deal with our debt would lead to a downgrade in our credit rating, but instead he submitted a budget that had a $1.5 trillion deficit and then requested a $2.4 trillion blank check. President Obama is destroying the foundations of the U.S. economy one beam at a time. I call on the President to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work.”
Harry Reid, The Hill:
The action by S&P reaffirms the need for... revenue-raising measures like closing taxpayer-funded giveaways to billionaires, oil companies and corporate jet owners.Yeah, that will fix our 80 year dance with Keynes and resultant social state calamity. Just as raising the debt ceiling was a short-term fix that brought on a downgrade, so is raising taxes.
The only solution is cuts in Government spending with commensurate cuts in taxation. Government has proven itself not to be the solution.