After the downgrade: what to expect and who to blame.

Let's start with the fact that only two countries in the entire world have a better rating - Norway and Germany.

Secondly, premarket activity seems to indicate a "move to safety" on the part of those involved in the stock market. This is manifest - and it is a little early to know for certain - in what appears to be a move towards the purchase of US treasury bonds!! If the "good faith and credit" of our country had been seriously tarnished last Friday, folks would be moving away from treasury bills.

Understand that if you have contractual financial relationships (a car, your home, etc.), the world does not change much for you. My wife and I have no credit cards. Our home is on a 30 year fixed rate loan and we own all three of our vehicles . . . . . . and, as a 66 year old, I actually have a job plus Social Security.

From what I can see, the long term effect will include future contracts and their associated interest rates. Food and energy prices are on the rise. This downgrade will serve to only increase the continuation of this upward inflationary trend but it will not be immediate and it will not be the disaster the Dems are hoping for.

What is of most concern is the fact that with the Standard and Poor's downgrade from AAA to AA+ had an additional attachment, that of "negative" as to the future outlook on the American economy. The downgrade reads: "AA+ but with a negative outlook." When asked by Chris Wallace, Fox News Sunday, which is more likely, a return to AAA status or a second downgrade, the spokesman for S & P responded by affirming the later.

It is most interesting to me that S & P suggested that if the House bill known as "Cut, Cap and Balance" had passed in the Senate, as well, there would have been no downgrade. With that in mind, if you are thinking of assessing fault, know that while all are guilty, the Democrats lead the pac, without question.

Let's not forget, in the coming months, the Republican controlled House actually had the solution in hand according to S & P. As it turns out, it was the Senate Democrats who stood as the "obstructionists." Rather than pass the Cut, Cap and Balance bill, these morons chose to gather in a back room and decide which series of name-calling would work the best. They came up with "terrorists," the "party of the jihad" and, most recently, "welcome to the TEA party recession." If you are a Democrat (and I used to be) and you are not embarrassed by the current leadership, you are part of the problem.

You should know the current prime interest rate has been kept artificially low for several years, beginning with the Clinton years. It was only a matter of time before it would increase. This downgrade may be the impetus needed to begin a prime interest march back to "normal." Know this: for the time being, the Federal Socialist policy we know as "Affordable Housing," is dead and with it, artificially reduced interest rates.

Conclusion? This will not be the end of the world. The 700 point loss on the stock market, last week, was a predictor of the S & P conclusion. I am hoping that last week was more of an "adjustment" than anything else. While the S & P explanation called for entitlement reform and tax modifications, it suggested that Cut, Cap and Balance could have been the beginning of a real solution, so much so that

had Cut, Cap and Balance passed through the Democrat Senate, there would have been no downgrade.

I hope we conservatives campaign on this fact in the coming 2012 campaign cycle.

Update: Sunday at 6 pm

Well, it does look like big trouble for Wall Street. But, many believe that Monday's downturn will be a continuation of the "correction" that has been the case for the past week. Some will blame the S & P downgrade, but many others believe that the downgrade is not the key factor. Understand that all nations in the world except two have a rating similar to ours . . . . or worse.

The Israeli stock market was shutdown for a period because of heavy and negative trading, today. The Japan Market opened at or around 6 pm this evening. Before we go to bed, we will have more of a glimpse into the future. Know this: if you take the downgrade off the table, chances are the Monday market would react no differently; after all, it experienced a 5% downturn last week, before the downgrade. And didn't Obama promise the end of the panic with the compromise deal ? Turns out that the "deal" really fooled no one of import.

One thing for certain, no knows what is coming next. This is another of those Obama firsts. We have gone where no man has gone before. For sure, it ain't going to be good.