The S&P downgrade of the US long term treasuries really says nothing about the US financial situation. It is a a strong statement of the lack of confidence in the political players. Players who are willing to sacrifice the countries well being for their personal and parties advantage.
For a clearly written understanding of why the S&P downgrade might not be all that important, check the NYT column by Paul Krugman, a Nobel prize winning economist.
….Let’s start with S.& P.’s lack of credibility. If there’s a single word that best describes the rating agency’s decision to downgrade America, it’s chutzpah — traditionally defined by the example of the young man who kills his parents, then pleads for mercy because he’s an orphan.Here’s the whole column: Credibility, Chutzpah and Debt
America’s large budget deficit is, after all, primarily the result of the economic slump that followed the 2008 financial crisis. And S.& P., along with its sister rating agencies, played a major role in causing that crisis, by giving AAA ratings to mortgage-backed assets that have since turned into toxic waste.
No, what makes America look unreliable isn’t budget math, it’s politics. And please, let’s not have the usual declarations that both sides are at fault. Our problems are almost entirely one-sided — specifically, they’re caused by the rise of an extremist right that is prepared to create repeated crises rather than give an inch on its demands.
OK, back to hanging in the tropical anchorage next to the largest city in Panama, watching the ships pass into and out of the Canal and using up the free WiFi that is piped into the anchorage by the kind government of Panama.