Late Breaking Geekery: Economess

Well, S&P downgraded the US's credit rating to AA+ not AAA (the best).  As Ritholz notes yes, it's hard to trust the agencies, but they do have sway, and he has a roundup of articles.  As I understand it the Obama administration is arguing that S&P used faulty math, which of course is entirely understandable considering.  What this means is something best left to more professional economic minds, though as I understand it higher interest rates are in the cards.

Personally?  I suspect this is a way to nudge the U.S. government towards more predictability – and perhaps more stimulus.

Yves at Naked Capitalism is starting a Bank of America Death Watch.  I trust Yves, and think he's on to something – Bank of America either has to engage in some radical activities or risk just plain dying.  If it does collapse like others, then that's going to be another potential contributor to a double-dip, will affect confidence in the economy of the US further, and lead to more political gridlock as a bailout will be floated.

Again, with all of this I put the odds of a double-dip recession (mild or otherwise) pretty high.  I wouldn't be sending any resumes to Bank of America either.

Now as everyone who reads this knows I'm pro-stimulus, so maybe this will get a return to stimulus and some logical budget cuts (as opposed to illogical ones).  It's gonna get interesting politically.

Steven Savage