BREAKING NEWS: Us loses AAA credit rating by S & P (read more...)-MSN Money


We knew that it did. But it was still a shock. Late Friday, credit and fund analysts at standard & poor's that downgraded U.S. Government bonds rating of AA + and warned that cutting down on AA was possible within the next two years.  The cut means that instead of the ranking with the most of the strongest economies of the world-by Austria, Norway, Germany and Australien--we now join AA credit risks such as China, Bermuda, Kuwait, Slovenia, Spain and Qatar.


The problem was the debacle, the debt ceiling was debate. As part of the bargain, the analysts at standard & poor's for $4 trillion in cuts over 10 years was looking for. Washington gave them a little more than half of them by antics not tested do not instill "Committees" and a political SideShow, the exact confidence.


After she saw this specific public position on the budget debate took, I from its threats now could walk not as the S & P analyst. Not following bugling of rating agencies while the housing bust. Not according to their performance in the euro-zone crisis heading. And while competitors Moody's and Fitch their AAA ratings of this week S & P, has the inevitable: they called us out.


The S & P team cited, "controversial" political process and a fiscal consolidation plan that short "falls" as the main reasons for the downgrade.


In their words: "General, the downgrading reflects our view that have weakened the effectiveness, stability and predictability of the American political and political institutions at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we have a negative view of the 18 April 2011 rating assigned to."


The problem, which is in the heart of my last comment, that politicians simply make a mess things in times of extreme economic fragility. As I said this today in response to the shocking market losses over the past few days seen:


"Sell-off, which accommodate a toxic mix of immense naivete and unearned self-confidence, agreed with the implementation, the politicians, toys with the basics of the global financial system start: US Treasury bonds." These "risk-free assets by the other securities are judged are the oxygen that supports the world of high finance.


"That has confidence and not unlike fueled a mini-financial panic, what is happening in the fall of 2008 as first bank was the Bush administration bailout proposal in the House of representatives defeated and Lehman Bros." was allowed to fail.


"With the only the recovery from a painful attempts, one-two punch of the Japanese economy errors and an energy price spike, the political games in Washington, D.C., and nerves supply chain" what if "Debt standard were too much scenarios." "What whatever positive momentum we had faded in June and early July."


It is not just about solution of the debt problem - but do it in a way that does not receive the economy. That was the focus of a blog post from July 29 ("is the business of the tea party-ruin again?") where I outlined a three-step solution:


"It took a long time, to us in this Schlamassel-and it will take a long time to get out." The first priority is the debt crisis end, before we have a repeat of the nightmare in 2008. Now is the time for a compromise. Secondly, we need a credible medium-term fiscal consolidation plan. Thirdly, we need to because of the economy and the labour market back on track to get find. A few weeks ago, I suggested two ideas.


"And the thing is, is the extreme position of the tea party-massive spending cuts now with no Steuerreform--how to contact with where most Americans, based on the last call." This crisis is not required. "And people want it."


Now, after one of the worst runs in the stock market history, traders spend a whole weekend review and implications of today's historical credit downgrade. You are not good. And that sets the stage for another difficult day for stocks when the market reopens on Monday.


My newsletter subscribers have been well positioned for the market chaos with targeted short positions and are up to 4.5% for the month vs. 7.2% loss for the S & P-500. Highlights include short position in Saks (SKS) and CarMax (KMX) - which my edge letter example portfolio to follow recommendations for my MSN Money readers in real time were booked.


Disclosure: Anthony KMX and SKS recommended short its newsletter subscribers.


Check out Anthonys new investment advisory service The Edge. A free trial of two weeks was extended on MSN Money readers. Click here to sign up.


The author can at anthony@edgeletter.com contacted and follow on Twitter at @ EdgeLetter. You can view his current on bearing selection. Feel free to comment below.


via:Top News Google

BREAKING NEWS: Us loses AAA credit rating by S & P (read more...)-MSN Money