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Cheers - AE

Saturday, 6 August 2011

Brief comment on breaking news

Still a busy weekend for me, but I didn't want to let one particular event pass without comment.

Click for linky
The United States' credit rating was cut for the first time when Standard and Poor's lowered it from triple-A to AA+, citing the country's looming deficit burden and weak policy-making process.

Standard and Poor's on Friday revised the nation's rating downwards to a AA+ with a negative outlook, despite a push back from the White House, which said the rating agency's analysis of the US economy was deeply flawed.
And my comment is this: holy shit! Okay, it's not unexpected but it is unprecedented in modern times. Is this the end of the idea that governments can just spend money they don't have on crap we don't need more or less indefinitely by taxing us more now and running up debts for which they'll need to tax us in the future? We can but hope so.

Comments (4)

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"Is this the end of the idea that governments can just spend money they don't have on crap we don't need more or less indefinitely.."

I'd love to think so...
1 reply · active 712 weeks ago
Hell, I'd settle for it being the beginning of the end of the idea.
According to the rating agency it has historically taken 8-18 years to get back to AAA status. A further downgrade is likely. Looks like Canada might have to find another market for its oil, as the Yanks won't be able to afford it any more.
1 reply · active 712 weeks ago
They can't afford Canada's oil right now, but they're still shopping and spending. I think the downgrade is more psychological than anything else, especially since neither Moody or Fitch have downgraded them... yet. Even AA status is, according to the Wikipedia page on bond credit ratings, 'high grade' with 'a very strong capacity' to be able to pay up. Whether their capacity really is very strong is another matter - Britain is still AAA according to S&P despite the ever increasing mountain of money it owes and the continuing lack of the faintest idea where it's going to get it.

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