It's the downgrade, stupid.

Forget the budget cutting - an exercise in futility as the CBO told us when scoring Boehner's plan. What we should be scared of is a downgrade in US creditworthiness when S & P and other rating agencies snatch our AAA bond rating and hand us a AA mark of Cain. Politico: But what really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor's, that Barack Obama could go down in history as the president who presided over his country's loss of its gold-plated, triple-A bond rating. Obama could win and lose at the same time, striking a deal to avoid default but failing to pass muster on the substance of that deal with credit agencies, which could go ahead and downgrade the rating anyway. Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it's not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and...(Read Full Post)