S&P downgrades U.S. debt

[zboy1]

Looks like for the first time in the history of the country, a credit agency has downgraded the sovereign debt rating of the United States. I'm no financial expert, but how long do you think the U.S. can continue its economic charade? I'm still hoping to leave the country after I graduate with my degree this fall. I hope that is enough time before the country implodes! How long do you think the eventual collapse of the U.S. will take place? 5 months? a year? 5 years? Any thoughts?

[ladislav]

I don't think there will be any big implosion any time soon. Not for say, 30 years. I think it will just first go the way of Britain- getting poorer and poorer , with former colonial "conqurees" eating it alive and the natives just becoming sheepisher and sheepisher, then, we are going to have more militaristic leaders and wage some more wars ala Falklands for oil and territory and freedom. Wars will keep the economy going and then, there will be a decline to the level of Argentina- a once proud, immigrant, rich 1st world nation that was on par with major Euro powers once but is now just a shadow of itself. Then, there will probably be riots which will be brutally suppressed. Ala Latin America. There will be new laws that will make it very easy to lock people up for life for the smallest things.
Education in the US will keep sliding and the people will keep getting dumber and dumber and the place will open up for foreign investors and the rich Chinese and Russians and Arabs and Latin Americans will just buy it up and run it. The whites in the US do not help each other and neither do blacks, but the Chinese do, so, I would give it another 60-100 years to get to the level of maybe, Uruguay.
But while it takes 100 years for the economy to slide to total poverty, arrogance and self-importance as well as aggressive nationalism may never go away. The Greeks still think they are God's gift to humanity and the Argentinians still think they are rulers of Latin America. And the Brits still think that HK people are poor colonials.

[onezero4u]

haha this ratings downgrade is news????

they should of been negative AAA 40 years ago!!

how does anyone put stock in the S&P rating anyhow...prior to the crash they had both Fanny mae and Freddy mac at AAA !!!

just elite bullshit politics...US is bankrupt...so that now equals AA plus only hahahaha shitting my pants laughing at the absurdity.

[onezero4u]

haha this ratings downgrade is news????

they should of been negative AAA 40 years ago!!

how does anyone put stock in the S&P rating anyhow...prior to the crash they had both Fanny mae and Freddy mac at AAA !!!

just elite bullshit politics...US is bankrupt...so that now equals AA plus only hahahaha shitting my pants laughing at the absurdity.

[Taco]

I don't think there will be any big implosion any time soon. Not for say, 30 years. I think it will just first go the way of Britain- getting poorer and poorer , with former colonial "conqurees" eating it alive and the natives just becoming sheepisher and sheepisher, then, we are going to have more militaristic leaders and wage some more wars ala Falklands for oil and territory and freedom. Wars will keep the economy going and then, there will be a decline to the level of Argentina- a once proud, immigrant, rich 1st world nation that was on par with major Euro powers once but is now just a shadow of itself. Then, there will probably be riots which will be brutally suppressed. Ala Latin America. There will be new laws that will make it very easy to lock people up for life for the smallest things.
Education in the US will keep sliding and the people will keep getting dumber and dumber and the place will open up for foreign investors and the rich Chinese and Russians and Arabs and Latin Americans will just buy it up and run it. The whites in the US do not help each other and neither do blacks, but the Chinese do, so, I would give it another 60-100 years to get to the level of maybe, Uruguay.
But while it takes 100 years for the economy to slide to total poverty, arrogance and self-importance as well as aggressive nationalism may never go away. The Greeks still think they are God's gift to humanity and the Argentinians still think they are rulers of Latin America. And the Brits still think that HK people are poor colonials.

Ladislav, I don't share your optimism.

When the wealthiest country in the history of the world gets downgraded by a credit agency its a serious f***ing problem. You can try to trivialize that all you want but the US props up the economies of country in the world becasue oil is traded in US dollars. I give the US one to three years tops to collapse. The further away from the US you are the safer you will be.

http://www.youtube.com/watch?v=b3-vwYJi ... ded#at=742

[Simoun]

Ladislav,

I have been lurking for a while, but I joined this site just for this question. I don't think this means a "Kaboom" in a Marvin the Martian sense, but this is a seminal moment in US history, and we have nowhere to go but down from here. We've been running on fumes for the past few years and the first time the checks don't get delivered to the leechy class, you're going to see the intro to Dawn of the Dead in real time.

IMO we're running on months, not years.

[E_Irizarry]

For my sake, I hope it will take as long as LadiSlav said it would. I'm trying to literally die in some p***y in Brasil beginning 2015 til infinity.

[Rock]

Its surprising that the downgrade happened this soon. But the context should be carefully considered:

S&P, Moodys, and Fitch are all US companies which have traditionally played-ball within the Wall St./Congress/Big Biz power system. That's how they get paid. They are not objective. When they do perform due-diligence, its typically cookie-cutter and superficial. Its one thing to downgrade the sovereign debt rating of a foreign country (they did so a long time ago for Japan, second largest economy at the time). But the US is an entirely different animal.

So why did S&P pull this move? Here are a couple of possibilities that come to my mind:

- Conservative republicans who seem to be wielding most of the power these days are out to get Obama and sabotage his re-election bid. He has already caved-in to them on many of the key issues - no public option, extension of Bush tax cuts and no tax increases for rich, lots of spending cuts but no commensurate tax increases (part of debt ceiling deal), and a strong likelihood that Social Security and Medicare benefits will be reduced in future. But conservatives are not satisfied and want him out, out, out! The downgrade is tangible event his foes can use against him to claim his administration destroyed the US economy.

- Its possible that S&P has stepped-out of the fray by making a bold move to re-establish its rating credibility and impartiality after the credit default swap debacle of 2008/09. This move is a strong vote of no-confidence in the temporary debt ceiling deal and non-tolerance of current style of dysfunctional government dominating Washington.

[Think Different]

Its surprising that the downgrade happened this soon. But the context should be carefully considered:

S&P, Moodys, and Fitch are all US companies which have traditionally played-ball within the Wall St./Congress/Big Biz power system. That's how they get paid. They are not objective. When they do perform due-diligence, its typically cookie-cutter and superficial. Its one thing to downgrade the sovereign debt rating of a foreign country (they did so a long time ago for Japan, second largest economy at the time). But the US is an entirely different animal.

So why did S&P pull this move? Here are a couple of possibilities that come to my mind:

- Conservative republicans who seem to be wielding most of the power these days are out to get Obama and sabotage his re-election bid. He has already caved-in to them on many of the key issues - no public option, extension of Bush tax cuts and no tax increases for rich, lots of spending cuts but no commensurate tax increases (part of debt ceiling deal), and a strong likelihood that Social Security and Medicare benefits will be reduced in future. But conservatives are not satisfied and want him out, out, out! The downgrade is tangible event his foes can use against him to claim his administration destroyed the US economy.

- Its possible that S&P has stepped-out of the fray by making a bold move to re-establish its rating credibility and impartiality after the credit default swap debacle of 2008/09. This move is a strong vote of no-confidence in the temporary debt ceiling deal and non-tolerance of current style of dysfunctional government dominating Washington.

Excellent and insightful post. It's a sad thing that the idiot politicians (on both sides) use the American people and the US economy as pawns in their games for power. It is now abundantly clear that they care more about their own jobs, power, and their "parties", than about the US itself or We the People. The fact that we have an antiquated "winner-take-all" two-party system that prevents third, fourth, and fifth parties from realistically having a seat at the table is bad enough. Anyone with a unique idea is bullied into abandoning it or compromising their principles away, by the D's or R's.

The colonists fought a Revolutionary War over lesser abuses coming from King George III. I think America has already seen its best days and we are on a long slide downward into 2nd or 3rd rate status. I think America will be around for hundreds of years, but in a different and lesser form. We will become viewed as just another has-been country with dangerous military toys. Very many parallels between the US and the decline of the Roman Empire, which took about 400 years to fade away, after Nero. It morphed into other things, as the US will do, as well.

[Simoun]

- Its possible that S&P has stepped-out of the fray by making a bold move to re-establish its rating credibility and impartiality after the credit default swap debacle of 2008/09. This move is a strong vote of no-confidence in the temporary debt ceiling deal and non-tolerance of current style of dysfunctional government dominating Washington.

I lean toward this. I think the S&P took a lot of heat for its ratings back in 2008/2009 and this is payback. In truth the US should be more in the B ratings because that $15 trillion is never getting paid back, not in any real sense. Sure, we can write a check for $15 trillion, but it would be worth half or less that amount in purchasing power.

I too am hoping this takes at least a few years to play out, because I want to have a bug out plan in place. The worst place to be is anywhere a significant portion of the population relies on a check from the government each month. Because when that check doesn't come, they will go looking for what they need and take it by force. Wish I wasn't so pessimistic.