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United States loses prized AAA credit rating from S&P

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The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday in an unprecedented blow to the world's largest economy in the wake of a political battle that took the country to the brink of default.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficit and rising debt burden. The action is likely to eventually raise borrowing costs for the American government, companies and consumers.

"The downgrade reflects our opinion that the fiscal consolidation 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 said in a statement.

United States loses prized AAA credit rating from S&P - Yahoo! News

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Bad news. We've been talking about it some on the "Austerity" thread.

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Not undeserved. If I had my credit card maxed out and instead of starting to pay it down I just asked for a higher limit I'd expect my credit rating to drop also. It's not S&P's fault that our government can't live within it's means. For the politicians who are fuming about this I have one suggestion. Prove Standard and Poor wrong, balance the budget!

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The day after Standard & Poor’s took the unprecedented step of stripping the United States government of its top credit rating, the ratings agency offered a full-throated defense of its decision, calling the bitter stand-off between President Obama and Congress over raising the debt ceiling a “debacle.” It warned that further downgrades may lie ahead.

http://www.nytimes.com/2011/08/07/business/a-rush-to-assess-standard-and-poors-downgrade-of-united-states-credit-rating.html?_r=2&nl=todaysheadlines&emc=tha2

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Not undeserved. If I had my credit card maxed out and instead of starting to pay it down I just asked for a higher limit I'd expect my credit rating to drop also. It's not S&P's fault that our government can't live within it's means. For the politicians who are fuming about this I have one suggestion. Prove Standard and Poor wrong, balance the budget!

If I had my credit card maxed out I would try to work overtime or get a second job to increase my income.

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herring, that's called "raising revenue" something we don't do. But we are brilliant at the blame game.

It's a partial wake up call. I think this is without question, a Tea Party downgrade," Democratic Senator John Kerry told NBC's "Meet the Press." "This is one of the most telling moments in the history of our country right now."

Kerry, who was the Democratic Party's 2004 presidential candidate said the conservative Tea Party movement had held the country hostage by consistently shooting down President Barack Obama's plan that would have cut the country's debt by $4 trillion over ten years.

"In the end they thought the hostage was worth ransoming," said Kerry.

But Republican Senator John McCain said the downgrade was an indictment of Obama's leadership.

"I agree there is dysfunction in our system and a lot of that has to do with failure of the president of the United States to lead," said McCain who lost the 2008 race for the White House to Obama.

"The president never came forward with a plan, there was never a specific plan. There was always that leading from behind."

http://www.msnbc.msn.com/id/44051133/ns/business-stocks_and_economy/?ocid=twitter#.Tj7GzXNqPJw

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On the one hand, it is worrisome (the downgrading). On the other, S&P kept

giving their best rating to the funds and banks that failed and were bailed out by

you-know-who. Therefore, I am thinking "who cares what they say"? They are bought and paid for, in the hip pockets of those they purport to grade.

Trouble is, people think they should care.

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credibility, chutzpah and debt

to understand the furor over the decision by standard & poor's, the rating agency, to downgrade u.s. government debt, you have to hold in your mind two seemingly (but not actually) contradictory ideas. the first is that america is indeed no longer the stable, reliable country it once was. the second is that s.& p. itself has even lower credibility; it's the last place anyone should turn for judgments about our nation's prospects.

let's start with s.& p.'s lack of credibility. if there's a single word that best describes the rating agency's decision to downgrade america, it's chutzpah-traditionally defined by the example of the young man who kills his parents, then pleads for mercy because he's an orphan.

america's large budget deficit is, after all, primarily the result of the economic slump that followed the 2008 financial crisis. and s.& p., along with its sister rating agencies, played a major role in causing that crisis, by giving aaa ratings to mortgage-backed assets that have since turned into toxic waste....

http://www.nytimes.com/2011/08/08/opinion/credibility-chutzpah-and-debt.html

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If I had my credit card maxed out I would try to work overtime or get a second job to increase my income.

Your credit card company would cut you off at that point. The "credit card" the US government uses doesn't do that. Sadly.

And, just guessing, you'd cut out all spending that wasn't absolutely necessary. Our government doesn't know that how to do that either.....head in the sand about what is necessary and what is not.

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If need be I would max out my card to feed my family or pay for needed healthcare.

Maxing out for that kind of reason is understandable. But once maxed out, your CC company probably won't lend you any more money. Their debt ceiling for you is what it is. You can't just vote to increase it.

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Maxing out for that kind of reason is understandable. But once maxed out, your CC company probably won't lend you any more money. Their debt ceiling for you is what it is. You can't just vote to increase it.

But she can make a decision to get another card and stack up some more debt, thus increasing her debt ceiling. People do this all the time and banks are all to willing to give multiple credit cards to people, especially if she figures out a way to keep making minimal payments.

Sooner or later the above leads to disaster and eventually one has to face the music and realize "hey I've only got so much coming in and adding to the debt probably isn't a good idea".

But comparing personal finance to government is apples and oranges sometimes.

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