It was a tough task, that's why it took "serious" politicians like the Republicans to pull this coup off. Thank goodness the US of A has dedicated "politicians" like the Republicans who take public "service" to a new high.
Credit rating agency Standard & Poor's on Friday downgraded the credit rating of the United States, stripping the world's largest economy of its prized AAA status.
In July, S&P placed the United States' rating on "CreditWatch with negative implications" as the debt ceiling debate devolved into partisan bickering.
To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a "credible" plan to tackle the nation's long-term debt.
In its report Friday, S&P ruled that the U.S. fell short: "The downgrade reflects our opinion that the ... 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 also cited dysfunctional policymaking in Washington as a factor in the downgrade. "The effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."
I don't put all the blame on the idiot Republicans. Obama can take a deep bow for his hapless and inadequate "leadership". Rather than confront the Republicans and fight for the US's future and the pocketbooks of the bottom 90%, Obama caved to the Republicans. What a farce!
The US credit rating has consequences of the bottom 90%. It means interest rates on US bonds will go up because investors will be wary of these tainted bonds. Other credit in the US is priced off the interest rate of US bonds, so those rates will go up. The financial markets will be rocked. They have already been rocked by worried stock markets. The US S&P 500 lost 6.7% this week. Globally stock markets lost $2.7 trillion dollars. That is wealth gone up in smoke because investors are scared. Thanks to the Republicans and their "no tax increase" and "I don't believe a default will cause any problem" attitudes. They have sabotaged the economic security of the bottom 90% for the 3rd time in a dozen years (dot.com meltdown caused by lax financial regulation, 2008 housing bust & bank collapses from lax financial regulations, and now the 2011 mini-meltdown).
Update 2011aug06: Here is a bit from a Robert Reich post that talks about the S&P downgrade:
Why S&P Has No Business Downgrading the U.S.He then goes on to point out that S&P was an enabler of the 2008 crash because they gave AAA ratings to mortgage securitization that was junkier than junk.
Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow.
Why did S&P do it?
Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.
And not because we might fail to pay our bills at the end of 2012 if tea-party Republicans again hold the nation hostage when their votes will next be needed to raise the debt ceiling. This is a legitimate worry and might have been grounds for a downgrade, but it’s not S&P’s rationale.
S&P has downgraded the U.S. because it doesn’t think we’re on track to reduce the nation’s debt enough to satisfy S&P — and we’re not doing it in a way S&P prefers.