U.S. Credit Rating Downgraded for First Time
When you woke up this morning, did everything seem a little less... reliable? It did, didn't it? That's because credit ratings agency Standard & Poor's no longer regards the U.S. as a risk-free borrower, despite a $2 trillion error in its initial accounting.
Citing, in particular, Republican intransigence on taxes, the agency announced its decision to downgrade the U.S. rating from the highest ("AAA") to the second-highest ("AA+") for the first time ever on Friday night. This was after an afternoon back-and-forth with the Treasury Department that revealed a $2 trillion error in Standard and Poor's calculations—the agency says the error didn't affect the outcome of its projections, which showed ever-larger debt and no path to sustainability; the Treasury is just kind of rolling its eyes: "A judgment flawed by a $2 trillion error speaks for itself," says a spokeswoman.
But, $2 trillion, whatever! This isn't just about "math," it's about how horrible everyone is in Washington, D.C. Do you remember when Republicans in Congress wholesale invented a fiscal crisis a few weeks ago, because they are six years old? It was called "The Debt Ceiling Affair," and it made Standard & Poor's scared:
The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.
Okay, well, so the U.S. is broken. But you already knew that! So what does the downgrade mean for you, and your thriving business picking up aluminum cans and glass bottles for the deposit? Probably nothing. You might end up paying higher interest rates on your mortgage or credit cards. But U.S. government bonds are still safe, and there aren't a lot of other places for investors to go; Standard & Poor's has been threatening a downgrade for months without affecting much; neither of the other two major ratings agencies, Moody's and Fitch, have elected to downgrade the U.S.; and also all three agencies are kind of huge corrupt jokes whose constant AAA ratings of jerk-off "financial products" make them about as responsible for the recession as anyone else.
But don't let us stop you from buying a shotgun and a water purifier! There may be "widespread uncertainty"! And a reversion to the barter economy! You might literally have to sell your kids! The ones you haven't sold already, I mean.
