Ok you can panic now. S&P has just announced its first ever credit downgrade of the US, moving the rating down from AAA to AA+. For all the gory details watch the video below, and you thought the markets were "interesting" last week!For my hundreds of daily US readers let me explain how poorly managed an economy can be and still be classed AAA to give you an appreciation of how truly awful a AA+ rating is. I live in the Australian state of New South Wales, which had until recently been governed by a bunch of self-serving socialists for over 10 years. Two of the three major cites of the state are borderline economic basket cases. The second largest city, Newcastle, only managed to avert total economic collapse by converting its abandoned steel works (the city's former largest employer) into the world's largest coal export facility. Yet given all these factors both Moody's and S&P rate the state's credit as AAA.
On the national level Australia has been governed by a bunch of back-stabbing socialists since 2007 that have dramatically increased the national debt without any apparent long term benefits, and who currently only hold onto power with the support of a couple of Reds who call themselves Green, who are lead by a guy called Brown (its a long story). Yet just like my state, Australia's credit rating is AAA. If Australia, who's economy makes up just 2% of the world's GDP can hold onto AAA, how stuffed does S&P think the US is?
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