*Only 15 countries (and the Isle of Man) now hold the highly coveted rating.
Click these links to READ ALL ABOUT IT at the nation's premiere financial newspaper, The Wall Street Journal (always the first choice for financial news) or at CNN MONEY, where you'll find helpful links like the following.
1.) Click here to get an explanation from the proverbial horse's mouth (S&P's representative - about 3 minutes). KEY POINT relating to DEBT CEILING DEBATE DEBACLE: "Very few government's separate the budget process from the debt authorization process." Note also the use of a term borrowed from Cold War parlance: "brinksmanship."
3.) Click here for how it affects you and why you don't need to panic.
* Not to make light of the current situation, BUT... Do you really think you need to worry about the Isle of Man usurping our superpower status? What about the rest of the list? Relax a minute. You've already heard about S & P's math error (which gives one pause -- after all, the ratings agencies that did not make this error did not elect to downgrade.) Consider that it may reflect a disagreement which is as much about which numbers to add, subtract, multiple, and divide as it is how to do it.
Bear iin mind also that Standard & Poor, Moody, and Fitch are companies paid to give ratings to securities. Consider the hit their reputation took when they gave AAA ratings to the very mortgage securities that dragged the economy down the toilet in 2008 (Imagine that! Guess who pays them!) and why they may be swinging back toward cautious ratings. Click here for the MARKETPLACE weekly wrap for persepctive.
We'll have to wait until the Asian markets open to see how the world is going to respond.
Just don't forget that fears about the Europe's SOVEREIGN DEBT CRISIS (read "PIIGS" with emphasis on the "I" for ITALY) are driving investors into liquid assets and safe havens (read "U.S. treasuries"). That lack of confidence puts the brakes on economic growth (what we really need in order to clean up our financial problems in the long run), but does keep the interest on our debt down (part of our problem).
Finally, note the hemispheric divide. It's not just THE WEST vs. THE REST, but NORTH vs. SOUTH.
FOCUS:THE BIG PICTURE -- How do our debt problems fit in with everybody else's?
The stock market's closing bell couldn't ring fast enough yesterday. CNN says, "Stocks plunged Thursday in their single worst day since the 2008 financial crisis. The Dow tumbled 512 points -- its ninth deepest point drop ever -- as fear about the global economy spooked investors." (RELAX and expand your perspective -- as a percentage, the drop didn't make the top ten; it's number 116.)
If you want to see what the market's summer roller coaster ride looks like, take a peep at CNN's graphic of the Dow Jones average (avg. of 30 or so biggie stocks) for 2011, and focus on May-Aug.
According to NPR's Melissa Block, "investors simply said, you know what, you can keep the cheese. Let me out of the trap. I've had enough." If you wanna' know WHY, click here for her report. It's a "must listen" that will take 4 min./16 sec. of your time.
The Senate passed the compromise bill this afternoon by a vote of 74-26, and Pres. Obama signed it into law shortly thereafter. Check it out at C-SPAN.What do people think about the negotiations? Here's what they said about them to Jimmy Kimmel. On a more serious note, The Pew Center/ Washington Post Survey says,
Apparently there IS something on which Tea Party Republicans and liberal Democrats can agree.
Wait a minute!What's happening?Aren't the bond vigilantes supposed to be coming after us?I guess all crystal balls are cloudy because in the DEBT CRISIS FAMILY FEUD, worldwide edition, "survey says....a security (read "investment;stock or bond") is only as good as it seems, and it seems that currently there are NO good alternatives to the U.S. Treasury bond."China certainly thinks so!
When facing a tough play, punt!Presidents do it by establishing blue ribbon commissions;congress does it by establishing special bipartisan committees.
In case you haven't noticed, the deal struck yesterday doesn't do the tough stuff.It doesn't touch entitlements (medicare, medicaid, and social security) or raise taxes.It boots the two "tough-nuts" to a special bipartisan committee of six members from each party and puts the whole Congress under the proverbial sword of Damocles.If the Congress can't accept the bipartisan committee's proposal, triggers set off very things each party fears most-- automatic entitlement cuts and automatic tax hikes -- YIKES!
Watch the original REALITY TV SHOW -- The United States House of Representatives. A QUORUM call is in progress. (QUORUM: aminimumnumberofmembersinanassembly,society,boardofdirectors,etc,requiredtobepresentbeforeanyvalidbusinesscanbetransacted.) They'll be voting shortly.
You can watch the vote in the House as it happens on C-SPAN. (Just a note.........Every time I get depressed about the low quality of answers and lack of insight in comments from students, I just turn on C-SPAN and listen to grown-ups for a while. Then I feel better.)
If you need a quick summary of the bill, use the left menu or click this link to access Speaker Boehner's powerpoint explaining its contents.
You'll notice that the House uses an electronic voting system. Members swipe cards with magnetic strips and vote yea, nay, or present during a 15 minute period. (Bells ring and lights flash in committee rooms indicating that a vote is being taken on the floor.) You'll also notice that at the last minute some votes may reverse. Remember this when we discuss LOGROLLING (when members trade votes -- "I'll vote for yours if you vote fo mine.)
Click here for video at CNN. Click here for video at Fox News. Click here for video at MSNBC. Pick your preference; the announcement is the same! Click here to see the White House's fact sheet outlining the deal.
FOCUS:CAN THE PRESIDENT ACT TO EXTEND THE DEBT CEILING WITHOUT CONGRESS?
Some popular pundits have called for executive action, arguing that Congress is "fiddling while Rome burns," and Sen. Tom Harkin (D- IOWA) implored President Obama to invoke the 14th Amendment to raise the debt ceiling if Congress fails to strike a deal before the Aug. 2 default deadline.
According to the 14th Amendment, “The validity of the public debt of the United States, authorized by law … shall not be questioned.” Does that mean President Obama can simply use EXECUTIVE AUTHORITY to direct the TREASURY to pay our bills even if Congress does NOT raise the debt ceiling?Let's ask a scholar.
WIKIPEDIA BIO CLIP:Ronald Myles Dworkin is an American philosopher and scholar of constitutional law. He is Frank Henry Sommer Professor of Law and Philosophy at New York University and Emeritus Professor of Jurisprudence at University College London, and has taught previously at Yale Law School and the University of Oxford. An influential contributor to both philosophy of law and political philosophy, Dworkin received the 2007 Holberg International Memorial Prize in the Humanities for "his pioneering scholarly work" of "worldwide impact." According to a survey in The Journal of Legal Studies, Dworkin was the second most-cited American legal scholar of the twentiethcentury.
Click here to read what he has to say about the question.
The President and his lawyers are not convinced.
Click here to read all about it in the ABC political tipsheet The Note .