Despite chatter through all of Friday, it still took many by shock when S&P issued a press release with the official decision that the U.S. credit rating is now AA+, the first time in history that American government debt has not received its top rating of AAA. Many noted that a AAA rating is rare in business; only four U.S. companies have a higher rating than the U.S. now: Microsoft, Exxon Mobil, Johnson & Johnson, and Automatic Data Processing. But rare as a AAA is, this historic downgrade prompted severe reactions from just about everyone.
First, let's get the most serious out of the way and start with China. The New York Times reports that China is none too impressed with us and had some "harshly-worded" admonition. As the largest foreign holder of U.S. debt, just hours after S&P downgraded U.S. debt, it said that Washington needed to “cure its addiction to debts” and “live within its means.”
“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” read the commentary, which was published in Chinese newspapers...
“International supervision over the issue of U.S. dollars should be introduced and a new stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” the Xinhua commentary said.
So... international supervision over the U.S. dollar. A new global reserve currency. "Painful facts." Time for something a bit more positive.
Warren Buffet told Fox Business News that S&P's downgrade "doesn't make sense" and he doesn't believe it. He may not be the largest foreign holder of U.S. debt like China, but he said that Berkshire Hathaway has considerable Treasury Bill exposure. And he's still optimistic:
"I don't get it," Buffett told FBN late Friday night. In fact, Buffett reaffirmed his belief in the quality of the United States' credit telling FBN, "In Omaha, the U.S. is still triple A. In fact, if there were a quadruple-A rating, I'd give the U.S. that."
Of course not everyone was unhappy about the downgrade. GOP hopefuls were quick to lay the blame squarely at the current administration. CNN amalgamates the responses from Washington. Michelle Bachmann lays it on thickest:
"The United States has had a AAA credit rating since 1917. That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11... President Obama is destroying the foundations of the U.S. economy one beam at a time. I call on the President to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work."
Finally, Snoop Dogg wasn't happy either, and had a little more general advice. He tweeted: "US Economy downgraded #getyomoneyright"