History In the Making – U.S. DEBT DOWNGRADED – Should We Panic?

Mac Slavo
August 6th, 2011
SHTFplan.com
136 Comments

For the first time in history, The United States of America has had its debt rating downgraded by globally recognized ratings firm Standard & Poor’s.

We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

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.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Source: Zero Hedge http://www.zerohedge.com/news/sp-downgr ... -full-text

This comes on the heels of a downgrade earlier Friday by China’s leading credit ratings agency Dagong Global Credit Rating Company, which lowered US debt to ‘A’ after having lowered in late 2010 to an ‘A+.’

“The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States’ declining ability to repay its debts,â€