Bloggers Respond to the U.S. Credit Downgrade, Stock Dive
The Dow Jones Industrial Average closed 631 points down today, more than 6 percent, in what the Wall Street Journal called "the sixth largest drop in history" after credit rating agency Standard & Poors (S&P) downgraded the United States' long-term debt rating one level, from the best possible rating, AAA, to AA-plus late Friday.
In a speech today, President Obama said the downgrade came from S&P's doubting "our political system's ability to act" and said "our problems are eminently solvable." The U.S. Senate Banking committee is "looking into" the S&P rating, but a full investigation is not in effect.
Meanwhile, the rest of us are left wondering: What is this going to mean?
Melissa McEwan at Shakespeare's Sister questions S&P's motives:
Not only did the US Treasury Department find a $2 trillion math error in S&P's analysis on which they based the downgrade (which S&P conceded before commencing with the downgrade anyway), but S&P has its own political agenda, given its role in the mortgage crisis.
Ann Althouse reacts to Obama's speech:
In the end, he attempted to tie his economics homily to the terrible helicopter crash in Afghanistan. The 2 things aren't really connected, but he needed to give a speech on the financial markets and it would have been unseemly to appear and not say something about Afghanistan.
Kady Liang at Momocrats spells out eight points, finishing with a reminder that "the stock market is not the economy." One of her observations:
Despite all of the above, IF investors are genuinely worried about default by the US government (which is what a downgrade signals), then the interest rate on 10-year Treasury bonds should be soaring (because the likelihood that the US government will continue to honor its debt in 10 years should have just deteriorated significantly). Instead, that interest rate has actually edged down today.
Psychologist Dr. Helen at Pajamas Media wants to know, "Is the economy stressing your family out?"
As for family arguments about the economy, my guess is that family members are most likely to argue along these lines. Those who believe in "social justice" are arguing with those who believe in economic opportunity.
Mitt Romney also chimed in with a whole lot of nothing, but he did say something that will strike home to many people right now: “.. I’m afraid the president is just out of his depth when it comes to understanding how the private economy works.”
Slick Mitt’s a vulture capitalist of the second rate order, but Pres. Obama has tripped over the presidency and has damaged himself a great deal by creating a catastrophic situation that played into the hands of his adversaries.
Tina Korbe at Hot Air isn't pleased with Obama's approach today:
In typical Obama fashion, the president sought as many scapegoats as possible, from the aforementioned deadlock to factors “we can’t control” — like earthquakes and … spikes in oil prices? As many observers noted, the latter, at least, we can control to a certain extent.
Elizabeth Scalia at The Anchoress jokes, "So, we can't laugh at Canada anymore?" and then gets serious:
If you’ve been thinking — and I know some have — that America needed a humbling, this may be aboot how it starts. Hopefully, the national psyche can take it.
Karla Elaine at Simple Living Family brings it home:
Am I an expert on any of this? Not even close, but times of financial uncertainty are a great reminder for me of why our family has been trying to live more simply. The American middle class has been hit hard over the past couple of years - our houses aren't worth as much, oil and gas prices are high, and we face huge health care costs.
Media Coverage of the U.S. Credit Crisis and Stock Drop
- Teaching and Learning about the U.S. Debt Crisis and Credit Downgrade at the New York Times
- Exclusive: S&P's flub-filled draft press release at Politico
- Who Should You Trust, S&P or The Government? at The Street
What's your take on Friday's credit downgrade and today's dramatic stock market plunge? If you've written about it, leave the link in the comments.