The RP’s Budget Crisis Update- August 9

With the passage of a debt ceiling agreement a week ago, the country has (at least for the time being) averted a short-term debt and default crisis. This has not, however, stopped our budget and debt woes. And so, with a credit downgrade, stock market slides, and the ongoing formation of the budget Super Congress comes a new Budget Crisis Update from The Recovering Politician.

The Dow Jones Industrial Average, as all reader are probably aware, experienced a gigantic 6% drop on Monday of 634 points. Here is what six economists from across the country have to say about it. [Daily Beast]

Reaction to the American debt crisis is global. Here is a look at how the world is responding. [Washington Post]

Accusations have flown that Standar & Poor’s, in downgrading the United States’s credit rating, has made major errors, with Treasury Secretary Tim Geithner claiming that the ratings agency made a $2 trillion error and other Obama administration officials echoing the belief that the downgrade was made in error. As a result, the Senate Banking Commission, chaired by Tim Johnson (D-SD), is considering making an official investigation. This maneuver has been considered before in the House of Representatives, as House Republicans have, before the credit downgrade, taken issue with the Obama administration’s efforts at averting the downgrade. [Politico]

The mechanisms behind decisions made at Standard & Poor’s is not widely known and highly secretive. The New York Times has provided as good a look as any inside the organization, in particular the deeply-hidden committee that decides which countries deserve which credit ratings. [NY Times]

The most recent stock market declines are but the most recent in a long series of falls that has defined the 2011 bear market: world markets are down by 20% since this May. Even developing countries, which are usually something of a bulwark against market slumps, are down by 16% in that same period of time. [Reuters]

With an air of uncertainty, conflict, and general pessimism surrounding the United States economy, businesses across the country are hesitant to expand in any meaningful way, even in a year that was initially expected to see 4% economic growth. In addition to the widely-publicized (and often weak) job numbers, wages are remaining stagnant, as a 9.1% rate of unemployment gives employers little incentive to pay their workers better than they absolutely must. [NY Times]

As speculation swirls in the public and private spheres in Washington as to who will be selected for the Super Congress tasked with tasked with making further cuts to the US budget and deficit, The Hill has assembled a list of possible candidates, ranging from likely picks Chuck Schumer and Paul Ryan to longshots Jim Cooper and John Thune. [The Hill]

Blame for the S&P downgrade and pursuant stock slides is rampant in Washington, and no one seems to be assigning blame to his or her own party. House Majority Leader Eric Cantor has instructed Republicans not to compromise on debt negotiations, Republican presidential candidates are calling for Tim Geithner to reign or be fired, and President Obama continues to lay blame solely at the foot of Congressional Republicans. [Washington Post]