Excerpt:
Standard & Poor’s may downgrade the long-term credit rating of the U.S. once again in less than three months after sending shockwaves through the bond and stock markets by stripping the nation of its top notch triple-A rating last week, according to an emergency Sunday night conference call for clients of Bank of America Merrill Lynch.
“We do expect further downgrades,” said Ethan Harris, North American economist, on the call. “We doubt the newly appointed bipartisan commission will come up with a credible long-term deficit reduction plan. Hence by November or December we would not be surprised to see S&P downgrade the debt again from AA-plus to AA.”
Harris said that the U.S. should have avoided the downgrade in the first place by meeting S&P’s demands of a $4 trillion deficit cut and a “demonstrating a sensible budget process.” What they got instead was a “deficit cut of $2.1 trillion and a budget process that’s been extremely chaotic,” said Harris.
[…]”If a disorderly Treasury market leads to the Fed embarking on QE3, repercussions for the dollar will be catastrophic,” said David Woo, head of global rates and currencies research, on the call. “Investors will be quick to conclude that U.S. monetary policy has been subjugated by fiscal policy and the Fed’s independence would be placed seriously into question.”
In other news, Estonia has actually received a recent debt rating UPGRADE:
In the midst of a world embroiled in economic turmoil, a few nations have managed to do surprisingly well—among them, Estonia. After near economic collapse during the 2008–2009 financial crisis, the country has managed to successfully bounce backwith substantial GDP growth, a vibrant trade environment, and a notable budget surplus.
During the first quarter of this year, Estonia had the highest rate of growth in the EU and the biggest drop in unemployment. In July, its credit rating was raised by Fitch to A+, a reflection of substantial economic growth.
But how did Estonia get here? Estonia possesses a flexible, open economy and investment climate that encourages competition and economic growth. It remains one of the world’s freest economies, according to The Heritage Foundation’s Index of Economic Freedom. However, prudent fiscal policies have played the largest role in Estonia’s impressive economic performance, particularly in recent years. Still, the path to fiscal conservatism was not easy; it required a lot of rigorous, painful cutback involving 9 percent of GDP in fiscal adjustments and large cuts to nominal wages.
Notice that Estonia’s economic policies are tea party conservative policies, not socialist policies.
Meanwhile, the White House has yet to respond to our first credit downgrade.
WINTERY KNIGHT 
This nation has turned it’s back on God and now God is taking back back the blessings of prosperity that we have enjoyed for so long.
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Why would a response from the White House matter (as it’s past 1:30 PM EST there already has been one but lets ignore that for now) – is S&P going to say, “oops, we made a mistake?” No, any response from the white house will simply be words – we need the house and senate to get serious about cuts (and it would be nice to have some serious leadership from the white house as that has been a little lacking in my opinion)…I think one of the largest problems and probably biggest justification for all of this is the up-tick in partisan politics and the GOP’s goal of “making it hard” for the president.
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The GOP should make it hard for the president when he wants to do stupid things to make matters worse…
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You know that’s not what I’m talking about – before the GOP had any idea of what the president had in mind their mantra was “it’s our job to make it hard” – which is wrong. Their job is to manage the country not to mess things up to make the president look bad. Obama has carried on almost all of Bush’s policies as well as wanting to cut entitlements – what are these stupid things you talk about – Bush’s policies that Obama wants to continue? It’s why every single poll I’ve seen regardless of the source has shown that Americans are going to hold the GOP responsible – they’re the only group in this entire fiasco that has been unwilling to compromise.
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Well, the Republicans are in favor of spending caps, immediate spending cuts and the balanced budget amendment. Obviously, some people are not going to like that – people who favor trillions of dollars of spending and trillion dollar deficits. So the Republicans are not willing to “compromise” with people who rant trillion dollar deficits in the last 3 years. Republicans like 4% unemployment rates and 160 billion dollar deficits. That’s what we had with Bush in 2007. Democrats like 10% unemployment rates and 1.6 trillion dollar deficits. That’s what we’ve had with Obama.
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you mean people like the GOP that literally favor trillions of dollars in military spending despite any obvious threat that would warrant a military that large? We a debt and deficit that are both spiraling out of control and despite the fact that social security will be 100% solvent until 2035 they (GOP) are focusing their efforts on that, ignoring the true culprits – entitlements (or really abuse of), military spending, and large corporate welfare. So no, republicans aren’t very different from the dems – the dems like spending on people while the reds like spending on large corporations
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Let me see if I can clear this up, since we seem to be talking at cross-purposes.
Is a 4.3% unemployment rate (Bush) lower than a 9.2% unemployment rate (Obama)?
Is a 163 billion deficit (Bush) less than a 1650 billion deficit (Obama)?
Can you answer that?
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I am so furious with the GOP right now. Were the actively trying to ruin our economy, or was that just a side effect that didn’t matter to them, because they all have enough money to sit pretty through the mess? They decided to play chicken with our economy. Well congratulations, everyone lost.
I’m typically so jaded about politicians that I can’t bring myself to care. But yesterday I was fuming.
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