"The Not So Greatest Show On Earth"
What do you get when you have two houses of congress, a President, an urgent problem that nobody wants to address (and is quite possibly insolvable anyway) and an election cycle just beginning to heat up?
It certainly isn't intelligent, insightful, visionary, forward thinking, balanced leadership. Certainly not a concerted effort to negotiate a course of action that is in the country's best interests. Definitely not a consensus building, solutions oriented, direction setting approach to a genuine threat to the future of the United States as we know it.
Instead you get a show that the Ringling Brothers would be embarrassed to put on.
As predicted, congress and the President did indeed agree on a way to increase the debt limit just in time. But not before a whole bunch of political grandstanding and positioning for the 2012 elections. We knew that was coming, and that the US would continue to be able to service its debts. But our national credit rating took a hit anyway, for the first time since World War One.
Evidently the S&P folks didn't enjoy the circus. They seem to think that the US economy and potential default on our debt should be a little more important than our political leaders (of all flavors) treated it. They seem to be concerned that our President and congress A) don't have a clue what to do about the problem, B) are incapable of working together to find said clue, C) are going to fight like hell to get re-elected to another term of total cluelessness, and D) are pretty likely to be given that opportunity be the American people. I think that scenario probably scares the hell out of them...and me too.
They probably looked at each other with that WTF look and began discussing how far to downgrade our rating. No sin has been committed yet, but political instability and ineptness means increased risk - even for arrogant Americans.
In practical terms, the downgrade isn't too important. US Treasuries are still the gold standard for safe money, and, except for China and India, the whole world in in the same shape we're in where debt is concerned. So the impact of the downgrade is only psychological.
But it is still an indicator - one of many - that indicate how fast and how dramatically the economic climate is changing. I had hoped that our transition to third world country status would not really kick in until after I'm gone. It's not like I'm going to live to be a hundred anyway.