Due to an ongoing health crisis in the family, blogging will be 'on and off' as time and circumstances permit for the foreseeable future. I also beg your indulgence if I am slow in responding to emails. New posts will appear below this notice.

Friday, August 05, 2011

S&P strips US of AAA credit rating

WASHINGTON — The United States lost its top-notch AAA credit rating from Standard & Poor's Friday in a dramatic reversal of fortune for the world's largest economy.

S&P cut the long-term U.S. credit rating by one notch to AA-plus. The credit agency said it was making the move because the deficit reduction plan passed by Congress Tuesday did not go far enough to stabilize the country's debt situation.

U.S. Treasury securities, once undisputedly the safest investment in the world, are now rated lower than bonds issued by countries such as the United Kingdom, Germany, France or Canada.

The move is likely to raise borrowing costs eventually for the American government, companies and consumers.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement issued late Friday, after financial markets were closed for the week.
Read the rest here.

Long overdue.

5 comments:

Ben said...

It seems that now would be a good time to explore a larger implimentation of No-Interest Banking like the JAK Bank in Sweden. The fact that the majority of our debt is outstanding interest is a major problem, and the #1 contributor to inflation. Talk all you want about being in debt in general causing it (which it has some role) it is really the creation of new IMHO "Imaginary" money by the charging of money for money that is causing this rapid inflation, unemployment, and economic as well as potential ecological disaster that we are currently experiencing. (Believe it or not, one need not be a Democrat to see that this causes companies and countries to cut corners to save money by firing people, downgrading salaries, or cutting corners to increase production, sometimes in an unethical manner.)

If you haven't heard of the JAK experiment, check it out on GOOGLE. If you want to email me, I have an indepth analysis of it by a bank that was looking to implement the business model in Canada (quite favorable btw) that I can easily share with you.

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Proskomen said...

Well, I hope those on Capitol Hill have learned their lesson. Perhaps it will lead to wiser management of the country's finances in the future.

Ah, who am I kidding?

The Anti-Gnostic said...

Ben:

Interest rates for loans to the US government are approaching zero, if not negative, in real terms. So we should be fine, right?

Ben said...

Approaching is not at. You have to take into account on any loan the ammount charged for "administrative fees, etc." It also depends on whether the loan was issued at a variable or fixed rate. By charging interest, they are causing inflation because the only thing that adds real, genuine wealth to the cash supply are goods and services. Charging interest, (money for the borrowing of money) only adds imaginative money that then needs to be backed up by real money, forcing the Fed to print more money, hence causing rapid inflation, unemployment (due to higher interest rates), and ecological disaster (because the government has to cut corners in many differing areas in order to pay off that interest.)