Telling it like it is - why the credit downgrade?

[dorminWS]

Check out the following except from the Genetski Market Comment.

Government reaction to the S&P downgrade of US debt took a negative psychological factor and made it even worse. It did this by showing just how far governments were from addressing their problems.
The Obama Administration blamed the messenger and suggested it wants to spend even more money in an effort to create jobs. In Europe, the head of the European Central Bank (ECB) said it would do “everything possible” to prevent a crisis. He then explained how the ECB’s first step would be to buy large amounts of Europe’s bad debt.
These are the worst possible reactions to current problems. They simply indicate the inmates are running the asylum and S&P’s move was the right one.
What governments should do is solve their basic problems. For the US the solution involves repealing Dodd-Frank, repealing Obamacare and furloughing all those at the EPA until further notice. These three moves would cut business expenses by $500 billion a year, enough to support 7 million new full-time jobs. Just for good measure, the Administration should also announce plans to reform tax policy so no one pays a tax rate in excess of 25%. It should also announce plans to reduce spending on all nonessential federal programs by at least 50%.
Simply announcing these moves would send stock prices rocketing higher. The economy would soon soar and the current crisis atmosphere would come to an end.
Until there is some recognition of the underlying problems and the means to solve them, the crisis atmosphere is likely to continue. I’m inclined to remain at a maximum defensive position with respect to stocks.
- Robert Genetski

[Taggure]

Well here are the 12 steps to get out of this mess

[Kreutz]

"Ratings" are worthless. Another useless service inserting more middle-men looking for more money.

Lehman brothers was given a AAA rating by S&P one month before it went belly up. Yeah, their insight is spot on.

The fact people trust these shysters(be it S&P, Moody's, Morningstar, etc.), given they charge money for their ratings; gee, no chance for malfeasance there right?

Apparently Virginia is afraid (why I have no idea) of losing its AAA rating, so, if it does may as well take advantage of its higher interest rates and get some munis. This stuff is still just mind numbingly transparent.

[m4a1mustang]

Morningstar is actually a legit source for analysis.

But yes, S&P, Moody's, and Fitch have to be taken with a grain of salt. Especially on the corporate side following the 2008 debacle. The market didn't react much to the downgrade as evident by the flight to Treasuries on Monday. It's still the safest sovereign debt in the world.