The Tea Party arrived in Washington after mid-term elections with talk of change in Washington. So far, Tea Party leaders have only been a distraction. To create change in Washington, they need to bring forth a plan and build consensus.
The downgrade (while perhaps not a total surprise) arrived somewhat unexpectedly ? and during a period when markets are already in an extremely volatile and fragile state.
The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday, a move that will affect the country's borrowing costs and investor opinion of U.S. assets. Here is a Q+A on what the downgrade means for investors, consumers and to the country.
The U.S. dollar may weaken and Treasury yields rise when Asian markets reopen on Monday, though any selling in response to ratings agency S&P's downgrade of the United States is likely to be tempered by the escalating crisis in the euro zone.
The S&P cut in the U.S. long-term credit rating to AA-plus is an unprecedented blow. It called the outlook "negative," signaling another downgrade is possible in the next 12 to 18 months. The U.S. dollar may weaken and Treasury yields rise when Asian markets reopen on Monday.
Rating agency standard & Poor's has staunchly defended the decision to downgrade the creditworthiness of the U.S. government and warned that further action was possible. "The debacle over the debt ceiling continued until almost the midnight hour," S&P's Sovereign Ratings Committee Chairman John Chambers said.
S&P?s stunning and controversial downgrade Friday in part reflected the firm?s assumptions about the U.S. political system?s ability to solve its problems. Others hold a more optimistic view, as Winston Churchill did. Churchill said, ?In the end, you can count on America to do the right thing - after she?s exhausted all other possibilities.?
China holds a large amount of U.S. debt. Xinhua, the official press agency of China, issued a commentary on Aug. 6 titled After historic downgrade, U.S. must address its chronic debt problems. The commentary stated that the days when debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing seemed to be numbered because S&P slashed the country's AAA rating for the first time.
?We have total confidence in the solidity of the American economy,? Baroin told French radio.
While S&P?s downgrade of the U.S. Government?s credit rating is controversial, most agree that the U.S. fiscal condition is serious. And while both Democrats and Republicans increased the budget deficit, three major policy errors by President George W. Bush last decade substantially worsened the U.S.?s fiscal condition, and the nation has been trying to recover ever since.
Republican presidential hopefuls congresswoman Michelle Bachmann of Minnesota and businessman Herman Cain have also called for Geithner to quit.
Part of the problem is that the downgrade (while perhaps not a total surprise) arrived somewhat unexpectedly ? and during a period when markets are already extremely volatile and fragile.
America's credit rating was downgraded for the first time in history. This will likely have dire consequences on mortgage and credit rates, not to mention the unemployment rate, which now stands at 9.1 percent.
In a stunning development, Standard & Poor?s Friday downgraded the U.S. Government's credit rating from AAA to AA+, arguing Washington has made inadequate progress cutting the budget deficit. The U.S. Treasury disagrees with S&P?s analysis and conclusion, but interest rates on U.S. home mortgages and car loans are likely to rise.
Consider the case of Canada, which lost its top-notch rating in April 1993 ? it took the country nine long, hard years to regain the coveted rating after enacting serious debt and deficit reductions.
Standard & Poor's has downgraded the U.S. debt rating, in a stunning move. More telling is why the agency downgraded the U.S. for the first time ever. S&P cited America's "less stable" political system as a reason for the downgrade.
The U.K. maintains a pristine AAA credit rating (which allows it to borrow money on international money markets pretty cheaply),
Perhaps the downgrade was not too much of a surprise.
The U.S. lost its AAA credit rating from Standard and Poor's for the first time in history, dealing a symbolic blow to the world's economic superpower. The impact of this downgrade is a matter of speculation.
China, the largest creditor of the world's sole superpower, hit out at the United States for its "debt addiction" and "short sighted" political wrangling in response to Standard & Poor's historic decision to downgrade the U.S. credit rating from AAA.
The United States wouldn't enjoy "risk-free" top AAA credit rating any longer. Standard & Poor's decision, being questioned by many including the White House, to downgrade AAA rating to AA+ was based on an analysis which blew up U.S. deficits by $2 trillion.
The U.S. treasury department attacked S&P?s decision to downgrade the country?s AAA rating, saying that there is a $2 trillion error in the credit agency's analysis.