Jo Coghlan,

I am well into my retirement. To keep fit, I go from op shop to op shop, picking books in the forlorn hope that what I missed learning during my working days as public toilets cleaner, rubbish bin removalist and laborer, can be redeemed in the short days left to me.

A few days ago I got a copy of a book by Milton Friedman and wife written purposely for the uninitiated. I set it down at the third page.

They went about using words that I had never heard. I miss my two dollars.

The same had not happened when I bought a book by Albert Einstein. From him I learned of fast trains and the trouble of the passengers’ time pieces.

Your article start with “Standard and Poor (S&P) have reduced America's sovereign credit rating from AAA to AA+”.

I assume that Standard and Poor may be two people, but what ‘America’s sovereign credit AAA to AA rating may be?

America has no king as far as I know and what is AAA?

>>Is the decision to downgrade America's credit rating a sign of a hegemon in decline?>>

Given the kind of junk S & P has rated “investment grade” in the past – remember all those mortgage backed securities that proved to be near worthless? – this is farcical.

No, S & P ‘s downgrading of American debt is not a sign of a hegemon in decline.

The fact that S & P along with their partners in crime, Moody’s and Fitch are still in business - THAT is a sign of America’s decline.

The fact that all those dodgy Wall Street bankers were bailed out is a sign of America’s decline.

S & P’s downgrading of US debt is simply farce.

This elucidating essay, is a timely, stark reminder that even the High and Mighty, have ingrained weaknesses ? Moreover, you may fool some people, some of the time, but there's always a Day of reckoning. D-Day. Doom /default. Aug 5.2011, will haunt the American psyche for Life. No amount of obfuscation, aggressive threats, and blustering denials etc, will change the status quo, one scintilla !

Welcome to the New silver American PESO !

American based S & P credited the US sovereign rating with a crippling AA+ default, and short term ( foreign exchange ) rating of A-1+, for two years. Moody's, Fitch's, and Dagong Global Credit, fully intended to implement a similar negative down grade. The shocking US Govt $ 14.3 T debt, and Congress's approval of more debt of $ 2.4 T over ten years, is puzzling indeed.

The US of A, is now on par with Greece, Spain, Portugal, Ireland etc, and will be stigmatized " defaulter " forever, and a Day. Worst, it didn't take 9/11 event, to scupper it's prestige in the World. The fall out is enduring. It's effusive addiction to debt, is mind boggling. A Sovereign Country, it's 1792 Constitution, guarantees Treasury & Mint, to print & coin money, on demand !

With GDP of $ 50 T, and debt of $ 15.5, it owes $ 70 B in actuarial liabilities eg. Social security, Medicare, civil & military salaries. Fed & Veteran's Retirement benefits etc. 42 States ( 85 % ) have obsequious Budgetary deficits. 10-15 % unemployment, with Municipal services: Health, Police, garbage disposal etc operating at half capacity. Source: CBO ( Congressional Budget Office )

The Credit Agencies issued their dire warnings as early as 23 May. Evidently, Congress, Obama, Treasury boffins etc either ignored the warnings or imagined it was groundless speculation. The Politicians, including the Tea Party, were embroiled in bitter finger-pointing, instead of addressing the real issues. It looked as if, nobody had their eyes on the ball ?
Quote: " A double dip Recession is now underway. The current dynamics, is virtually unchanged policies,and is unsustainable "

Meanwhile, our RBA, Gillard Govt, Bank Economist & Financial planners in every newspaper, continue to talk up the crisis. Maintaining we have a robust Economy, and the fundamentals ( Chinese Trade ) are sound. Notwithstanding, the ASX already lost $100 B, and Superannuation Retirement Funds have suffered 5-7 % dip, and worsening !

At this point of time, consumer confidence is at a
nadir, and M & D investors, are panicking en masse ! Who can blame them ! The RBA cash rate of $.75 % is the highest in the World, and although appearing attractive, is delusional. Incredibly, the AUD is intrinsically linked to US Reserve, fiat currency. Currently $ 0.973, which is perceptually declining, amongst the major currencies, after the Yen and Swiss franc !

China, OPEC, Brazil etc are calling for an immediate substitute for the plummeting greenback. The Austrian School of Economics have always claimed the Global crisis could have been largely avoided by maintaining the Gold standard of yesteryear.

Since 1971, impeached tricky-dicky Nixon, canceled the US Gold Standard, after Switzerland redeemed $ 50 M paper for Gold. Similarly, France withdrew $ 191 M. The Nixon Shock ( wikipedia ) promptly closed the Gold window, blaming Foreign Govts for an exchange crisis, and precipitating a Trade War & Balance of Payments debacle. Hitherto, $ 35.00 US, paper money was redeemable for one ounce of Gold. US Govt Depository Fort Knox. ( Kentucky )Once held 20,205 m/tons. Shrinking to 4578 m/t ( 22% ) The Vietnam War expenses accelerated the impact.

In retrospect, Wall St, the center of Commerce and progenitor of the World's Hedge Funding scam, should have foreseen the double whammy crisis, and gone into damage control. It would have averted the disaster from the onset & mitigated the US from becoming the Banana Republic of the Northern Hemisphere.

Better believe it.

Well said dalma, inevitably most people are saying that the GFC was down to corporate greed. Not so, it is down to the governments inability to take ultimate control of the country and business. And the misguided and outdated Keysean belief that you can be to big to fail.
Governments have become the playground bullies and will only pick on the little kids. Sadly, the Greek teachings have long been forgotten.