By Steve Goldstein
WASHINGTON (MarketWatch) — Standard & Poor’s Friday night downgraded the U.S. debt rating to AA+ from AAA and, while removing the world’s largest economy from CreditWatch, said the outlook was negative. “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said. “More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.”
—I am not a supporter of the credit agencies, but they have a good point. The political muscle game wasn’t played out at the right time and with the wrong issue.