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[counting]

Hard to tell. Let's see what's the European market and U.S. market performance at the end of the day.
 
The Asian market is doom today. As bad as last last Monday. Mostly opening low, and stay low. The rest opening normal, and going down. Something more than pure financial reason. (Almost every single stock falls, feels more like the problem of faith.)

That's not a very rigorous test.  There's a huge number of European stock traded in America and vice versa.  Furthermore, not even experts can make more then an educated guess at who would get hit by a theoretical Italian crises that could take many different forms.  How will the American and German banks get hit?  Does Italy stay on the Euro?  Do the next German elections lead to a more Italian friendly government?  How much of an impact will there be on the Dollar-Euro exchange rate in a year, three?  20?  And then there all the structural issues that were there before like how much can stocks fall anyway given the P/E ratios on each continent, etc.

Unless you are a soothsayer, just looking at whether the European or American markets are hit hardest isn't going to cut it.  I don't have the slightest clue what a good indicator would be though, I'm just going with what seems natural to me.

Stock market are famously hard to predict. No matter what kind of nonlinear model you used. But when you walked into the stock exchange house, and hear what people are talking, you can get a pretty good idea what's everybody is feeling right now, and what topics are they talking can tell you some clues. It's the collective thoughts and decisions driving the stock market rises and falls. Enough people believing something, then it WILL happen regardless it's true or not.

[Aqizzar]

At this point, I think it's more a question about how much investors trust Standard & Poors.  As the story goes, they alerted the Treasury a few hours before the media found out, and even by then, the White House was on the phone with S&P's board of directors in a fury.  Mostly because in the couple of hours they had to look at the paperwork, they found basic arithmetic errors in S&P's debt calculations amounting to trillions of dollars off.  The crazy part was, S&P didn't really try to deny this - they accepted their math was way off, and insisted they were standing by the downgrade anyway.

There's also history to consider, that S&P supposedly has a marked tendency to undervalue the credit of public debtors and overvalue private debtors.  Every state, county, and city in America has a credit rating, and S&P in particular is infamous for downgrading their ratings at the first sign of financial trouble while only grudgingly ever raising them, no matter whether the entity has ever come close to defaulting.  Meanwhile, as complicit as the entire credit rating industry was in the 2008 bank collapse (handing out AAA ratings like candy to junk bonds mostly) S&P in particular was trumpeting investment in Goldman Sachs and Bear Sterns even as they were going down in flames, even trying to steer private investors toward Sterns before shit really hit the fan.

Then again, it all comes down to their proclamation that their downgrade was based in the jawdropping shenanigans in the debt ceiling "crisis", and the fact that the best solution was to postpone the problem.  On the one hand, as a credit rating agency, they're supposed to be politics neutral (ha) and stick to proper accounting and mathematical evaluation (and get the math right in the first place).  But they do have a point, in that the United States government is one the few entities in the world (public no less) that is legally bound in how much money it can borrow.  The fact that had a settlement not been reached and the Treasury hit the debt ceiling, overnight the US government would have gone from guaranteeing every payment to everyone all the time, to picking and choosing which bills to pay.  No mathematical model can account for that kind of dynamic, since it's based entirely in what human avarice might come from day to day.

I can't help but think that the announcement itself was given out at the end of trading on a Friday, to give the world as much time to hem and haw without consequence before the chips go down again...

[nenjin]

So I guess Canada once went down to a AA back in the 90s when they were having some debt issues as well. So there's precedent that this isn't something catastrophic that can't be recovered from.

More it's just one more drag on the economy and confidence we don't need, and is of course a possible prelude to worse if our political situation doesn't improve and other agencies decide S&P was being prudent.

[Levi]

So I guess Canada once went down to a AA back in the 90s when they were having some debt issues as well. So there's precedent that this isn't something catastrophic that can't be recovered from.

I wouldn't be surprised if we ended up there again considering how much debt we've been racking up lately.

[Phmcw]

France is the country that bother me. Italy and Greece are irrelevant, small economy.
But France is a big country, Sarkosy has been a disaster, their debt is high and they have no prospect of high economical grow.

[PTTG??]

I think it's time that we seriously start to discuss what individuals can do to remain solvent and healthy when the global economy shuts down. I for one think that people should be ready to build more localized economies which can bootstrap faster and are more resilient to global shocks. The cost of living will increase; without industrial farming in the US and slave labor in china, food and goods will simply cost more to make.

I, for one, think that Cascadia should form a new nation. If British Columbia, Washington, Oregon, and Northern California were one nation, they could easily place in the top 20 world economies. Combine that with Nevada for solar power and the Valley to add to Oregon's productive farming regions and we'd be easily self-supporting.

[Heron TSG]

Yeah, vast farmlands in Oregon, central/eastern Washington, and the Valley would really add up for food supply. Things would really have to go to shit for that to happen, though.

[Nadaka]

California alone ranks in the worlds top 10 economies. I would also point out that it pays far more to the federal government than it gets back. Meaning that if it ceded from the union, it could solve its current budget problems completely from the tax money that it no longer bleeds into the Midwestern red states that get more money back from the federal government than they pay.

[Heron TSG]

Washington, too, is pretty high up there. It's been theorized that Washington alone would be self-sustaining, though not necessarily a huge economic power.

[Kon]

At this point, I think it's more a question about how much investors trust Standard & Poors....

Standard & Poor's, I think, has lost a lot of credibility.

Countries that are most likely to default have very high bond rates. Greek bonds, for example, are extremely high because investors consider them very high risk. They need to be high to get people to buy them. On the other hand, US treasury bonds, bills, and notes are very low relative to other countries' because those with money, like the Chinese and Japanese governments, think they are low risk. That's not politics; that's investors trying to preserve capital.

[Levi]

Its been a fun day on the stock market.   

Spoiler (click to show/hide)

[RedKing]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

[Phmcw]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

I'd bet something that the markets has gone down because they expected to go down because of the rating thing.

[Levi]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

It feels colossally bad when its been doing for so many days in a row.  Oh well, it'll go back up once people stop panicking.

[RedKing]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

I'd bet something that the markets has gone down because they expected to go down because of the rating thing.

There is a great deal of truth to that. I think the world economy would be fine if we could just pump antidepressant gas into the major stock exchanges on a regular basis.