My prediction that no meaningful positive outcome would come of the debt limit struggle has come to pass. The limit was upped by a couple trillions coupled with a promise to reduce the debt by a couple of trillions over 10 years (read: will never happen, the only cuts that you can actually kind of count on are the ones that are immediate). Hell, we're still not operating on a bona fide budget and haven't for a couple of years running now.
So now S&P has finally downgraded the US's debt, something which honestly is long overdue.
Overdue I say because AAA is supposed to mean as practically riskless as exists in the real world. Does anyone think that US government securities fit this classification? Yes, they might not technically default---through the expedient of just printing more money/inflation/QE/other slight of hand, but the value of what securities you hold in real terms most assuredly will decline in such a scenario. And that is what risk ratings are SUPPOSED to tell you. There's another, albeit scarier, way to look at things though I suppose. And that is, to say that SOMEBODY has to hold the AAA, no matter how much their credit objectively sucks, so long as it sucks less than everyone else's. Try explaining that one to your middle class & upper middle class clients as a financial advisor. If that's the rating rubric that we'd like S&P to use, we ought to at least have the decency to say so in no uncertain terms, so that investors can consider 'alternative investments'. A fair bit of the investing public appears to have already concluded this, which is why we've got gold presently north of $1600 an ounce.