With the recent downgrade of the United States credit rating from AAA to AA+, government officials are bashing S&P, but I believe that it's a knee-jerk reaction to the downgrade. While the downgrade shouldn't be looked at as a catastrophe, this is the worst time for something like this to occur. With the ongoing battle of working towards taming the unemployment rate, stabilizing the housing market, correcting the issues in Europe, and the ongoing fears in the global economy, a downgrade of the United States only adds fuel to the fire.
S&P's ethics should not be in question and I am aware of the political games which will now be played in an effort to discredit the rating agency. We're now going to see the Republicans blame the Democrats, the Democrats blame the Republicans, the White House blame S&P, and everyone blame Europe. S&P had told the government officials a while back that the debt ceiling needed to be raised by $4 trillion or else the United States could be at risk of a downgrade. Apparently, politicians and lawmakers didn't take that very seriously....no surprise there.
The coming few weeks will be volatile and will come with changes from Europe to the United States. I intend to sit tight and let the market drop and stabilize before I jump back in and start buying again.
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Note: This was first posted on: http://investmentsinsight.blogspot.com/
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Saliq
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