So Anyone care to look into their crystal ball and tell us what's going to happen with this downgrade??
Is it time to flee and move to cash??
I would agree on the "vote of no confidence" idea if these ratings agencies had any credibility - I have "no confidence" in them after all their "AAA-rated" toxic securities blew up 3 years ago.
I don't know exactly what that means will happen on Monday.
I'm not sure why this should affect anything. S&P hasn't discovered anything new, and as others have said, the rating agencies displayed themselves to be fairly clueless in 2008.It is true. I saw the report on CBS news.
S&P downgrades U.S. debt - CBS News
Another sell off this Monday?
The error was in the calculation of the U.S. debt-to-GDP ratio over time and was based on a misreading of what the correct congressional baseline was, government sources indicated. They said that once informed of the error S&P revised its rate-cut rationale to emphasize the political aspects of the country's debt situation.
I would agree on the "vote of no confidence" idea if these ratings agencies had any credibility - I have "no confidence" in them after all their "AAA-rated" toxic securities blew up 3 years ago.
In other words:
- They saw some numbers which they didn't like
- They created a narrative to explain it in terms of X and Y
- The numbers turned out to be wrong, thus making X invalid
- The authors of the narrative turned up the volume on Y
Looking ahead, we now have a process in place where we can expect to repeat the recent brinkmanship over and over again. Each time presents a risk that the agencies will have to downgrade us 17 notches. That risk of ratings downgrades and default, somehow, has to factor in to current ratings. And the only way it can, is with lower ratings today.
But you're just looking at the federal level. The federal income tax is only part of the burden. Over the last 20 years, a lot of things formerly done by the federal government have been shifted to states and municipalities, and they have raised taxes. It's the total taxes paid by individuals and corporations that is the best measurement of the government "drag" on the economy. When that drag gets too high, there's just not enough money left for private industry to make the investments needed to increase productivity. That's the death of the goose that lays the golden eggs.It's not like we are all paying 60%- 90% income tax rates and can't bear any more burdens. Rates are among the lowest they've been since the establishment of the income tax in 1913.
Yep. I think it's one of those things you have to experience to truly understand.
In something I read tonight, the analysts said Mr. Market had already factored this downgraded rating possibility into things. I don't know exactly what that means will happen on Monday.
"China bluntly criticized the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over."
"China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency."
--from yahoo business
Nah, I saw this too about China - looks like everyone's piling on the quarterback. I vote with the rest that say that this is no big news. Nothing new. You think anybody is going to buy or sell on Monday because S&P repeated the obvious?I vote for a tough day Monday.
I don't like the current political/financial situation we are in. But just because one rating company downgrades US debt (which seems laughable to even say it), is no excuse to sell out of some well positioned stocks.