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Current Events, Economy, Finance, Money, Politics

US loses AAA credit rating


It was bound to happen. You can only run the credit cards up so far before your score takes a hit. Today, Standard & Poor’s lowered the long-term sovereign debt rating of the Untied States to AA+ from AAA. They also left the option on the table to lower it again if they don’t see positive change, and soon. Their reasoning was political risk, rising debt burden and a negative outlook.

This ain’t good. This is going to make everything more expensive. The dollar is likely to take a bath and inflation will rear it’s ugly head and bite the American consumer right on the ass. Don’t fool yourself, inflation has been going on already. Take a look at your electric bill or your grocery bill.

Here’s a link to the announcement y S&P.  Credit Portal.

More on this later…

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Discussion

3 thoughts on “US loses AAA credit rating

  1. I’m surprised it has taken this long for this to happen. If the government soon doesn’t get it’s head out of it’s backside, things are going to get much worse before we see anything good happening! Great post and thanks for sharing 🙂

    Posted by Mary Hudak-Collins | August 6, 2011, 8:28 am
  2. Doesn’t sound like a very good prognosis to me. I hope there’s a way of improving things. I can’t imagine them getting much worse. Already I’ve heard that we are potentially moving towards a second recession. I’m not sure how families that have been struggling can endure much more instability in our economy. We need a change…and quick. Many families don’t have a savings to fall back on and already their budgets are stretched…with growing prices this is making everyday life more of a burden. I hope the upcoming election in 2012 does something…but frankly, unless some third party comes in and wins the hearts of the people and actually is built upon integrity and values and smart fiscal thinking,(and I’m not so sure there’s any hope of that) it’s only going to get worse.

    Great post.

    Posted by Jessica Mokrzycki | August 6, 2011, 8:54 am
    • Thanks, Jess. Imagine this, there are mutual funds, pension plans and other accounts out there that hold US Treasuries. Many, if not all of them, have rules to hold only AAA rated bonds. Now that we are AA+, they will have to unload them. We have trillions of dollars in US bonds out there that can potentially hit the market. If they do, or even if a small amount does, it can crash the bond market raising the interest rates on our Treasuries even higher. Interest that needs to be paid out of our general fund. It’s about to get much, much worse, I think. I’m not an economist, I just play one on the internet, but this could push the value of the dollar down and exacerbate the already tumbling stock market. Making our retirement funds, savings accounts, and the money in your pocket worth much, much less. Not good.

      Posted by tom | August 6, 2011, 9:05 am

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