As promised, S&P downgrades United States AAA credit rating

Madison Ruppert, Contributing Writer
Activist Post

That sure was fast, Standard and Poor’s has already cut the American long-term credit rating from AAA to AA-plus just days after the debt ceiling was raised.

This downgrade will increase borrowing costs for the Treasury, meaning it will be even harder for our weak economy to work off the black hole of debt that just continues to grow thanks to the incompetent clowns in Washington.

On top of the huge nose-dive in stocks yesterday, this downgrade is going to compound the American economy’s considerable issues and impediments significantly.

The once reliable United States Treasury bonds have officially lost their status as they are now rated lower than bonds issued by the governments of Canada, Britain, France and Germany.

This is likely to result in China divesting even more of their reserves, along with many other nations.

Personally, I do not know how they are going to continue bond auctions with this significantly lowered rating and the implications it will have on the worth and dependability of the bonds.

Even after the S&P downgrade, their outlook on a new American credit rating is still negative, which means that there could be yet another downgrade in the next 1-1.5 years.

In a Reuters report, Chief Investment Officer at Harris Private Bank in Chicago, Illinois, Jack Ablin stated, “the long term implications [of the downgrade] are daunting. Short-term, Treasuries remain a premier safe-haven refuge.”

I seriously doubt that Ablin would keep his own funds in Treasuries for any significant length of time given the inevitable dumping of bonds across the world market in the future.

As noted in the Reuters report linked above, this downgrade is likely to exacerbate our problems with China.

Several prominent Chinese bankers and rating agencies have voiced concerns about how the United States is handling its debt issues and have even said that America is negatively encumbering the global economic recovery.

It is indisputable that this downgrade will significantly impact the borrowing ability of our government as well as the ability of the people to pay off these massive debts.

An American securities industry trade group named SIFMA has estimated that this downgrade could increase funding costs for the public debt by roughly $100 billion.

However, no one knows what the impact would be if there was a massive dump of bonds from our largest creditor nations.

It is unfortunate to see that this major issue is going to be used in the 2012 elections as a political football instead of being treated like a serious issue facing the future of our nation that should be outside of petty pseudo-partisan politics.