Downgraded

Yeah, it's not funny anymore.

So, Standard and Poors downgraded US debt.  Fitch and Moody did not.  I'm not sure what this does to long term borrowing.  No one is.

First of all, the fact that they made a $2T error in their first report, admitted it and STILL downgraded US bonds, suggests, as many have noted, that this is not about levels of US debt to GDP or our capacity to pay it off.

Rather S&P has made a statement about our political situation.  I think Daniel Gross explains it well here.

The GOP brinksmanship on the debt ceiling created an artificial crisis that had an unsatisfactory resolution.  S&P basically said, "If you can't reach a comprehensive debt agreement with default hanging over your head, then you can't reach any debt agreement."  While there was some "both sides do it", the put a lot of the onus on the faction within the US government that will neither consider new revenues nor worry about actual default.

Put another way, the GOP insistence on taking the nation's credit hostage and then failing to agree on anything real, means that our political system is broken.

Well, no kidding.

Part of the problem with all this is that because S&P made essentially a political statement, then it can be ignored, because we operate in a current culture where objective truths are denied repeatedly as being "just politics".

Another problem is that S&P hardly has covered themselves in glory the past few years.  They missed the real estate bubble and then screwed up the math on the US debt downgrade.

Ideally, worries about the US's ability to honor its debts would come from the bond market itself, not a self-anointed ratings agency, which clearly has an axe to grind.

Once again, the decision to wed the debt ceiling to debt reduction has proved disastrous for everyone involved (whether they wished to be involved in the first place or not).

The proper time and place to have the discussion on long term debt is during the budgeting process, not the debt ceiling.  But since the GOP won't actually produce a budget that has the cuts they want, we are back to hostage taking.

In short, I'd say S&P is wrong for all the right reasons.