the s&p, they are not god, for sure. this is just an opinion. but their job is to give an opinion on the credit worthiness of companies and countries and part of their judgment on the credit worthiness is about how the country's budget is put together and if their judgment is more refer knew is part of what makes the economy stronger and we shouldn't be afraid to say that. >> already there is policies going on about this. a lot of people, what does this actually mean? is there a possibility of a growing interest rates and if we see that if that is in fact going to happen? >> the result that we may not see an increase, the extent to what people get worried about the debt and that may have a rather caring fact that makes the interest rate lower in the united states. it's unclear what we would see. over time, bill gross referenced, the biggest bond investor in the u.s., indicates that we will see an increase in a quarter of a percent. that would affect taxpayers and credit card mortgages and a lot of other things. you would see that trickle all the

the s&p thinks the deal fell short. after standard and poor's downgrade, the obama administration fired back saying the s&p figures were off $2 trillion. s&p says its decision to downgrade stays. what is next? where do we go from here? felicia taylor is live in new york. this credit downgrade is a stunning wake-up call. >> reporter: completely. we had a aaa rating in this country since 1917. this now means that those countries that invest in the united states have a rating below that of britain, france, germany and canada. that makes it a risky proposition to invest in the united states. the reason this is important is interest rates could go higher in the short-term. any kind of investment, credit cards or insurance payments, is going to be at risk. that's why this is critical for every consumer in this country. it's not just about investors and the economy. it is about the entire country overall. what washington now needs to do is get back to work and figure out how that debt deal is really going to work out and satis

here's what the s&p 500 stock index looked like today. a mid-afternoon effort to stall the selling failed with the index shedding more than 6.5% by the closing bell, ending at the lows of the day. pull out though, here's the past 12 months. we have easily broken the lows from june and march, and we have fallen below this low last november. the index is back to prices last seen 10 months ago. the selling was significant. 43% of stocks listed on the new york stock exchange hit new 52- week lows. 28% of nasdaq-traded stocks hit new lows. selling was across the board, but financial stocks, energy and the materials sectors caught the brunt of it. the financial sector shed 10% today. energy and materials were down more than 8% and 7% respectively. the leading financial loser? bank of america. look at this share price. shares sank more than 20%. the stock is down more than 30% since last wednesday. here's b.a.c. since the spring of 2009. b. of a. also was today hit by a lawsuit brought by a.i.g. a.i.g. wants to recover more than $10 billion lost

america's new credit rating according to the s&p. major credit agencies we're still aaa. our word of the day is a two-fer. aaa is the highest rating, it means a country has extremely strong capacity to meet financial commitments. aa+ means a very strong capacity to meet financial commitments. s&p says we're in between. the agency knocked the u.s. down because of political risks and rising debt burden. a lot of people don't agree, secretary timothy geithner said s&p showed terrible judgment. let's go to carter evans live from the nasdaq marketsite in new york. everybody is asking how futures are looking, what's going to happen to our stock market. i know you can't prognosticate beyond the open, but you can give me some clue as to how it's going to open. >> let's not forget aa+ that's a high capacity battery, right? i think. just trying to lighten the mood a little bit here because here are futures. they're not looking so good right now. dow futures down 280 points. all the major indices down more than 2.25%, down about 2.5%. we'll see

this was in the late 50's. my grandfather and my father, like many other irish who went to cuba during the past three centuries, became integrated into the cuban society and many used spanish as their mother tongue. as a child, i was never able to pronounce certain words. i spent many solitary hours searching for words and phrases in dictionaries. my spanish was not cuban enough. my english was not irish enough. my catalan, only a few words. spanish was and is a privileged territory where i feel alive and well. my father grew up in new york and havana and married a cuban woman, my mother. all my family shared a great loving for havana, a city they call home. but contrary to my family, i grew up dreaming of traveling and wanted to leave havana for dublin, where some of the most famous writers i keep admiring were born, and also dreaming of paris where my grandparents, my grandfather, spend many important years of his life. also i want to move to my place, i don't know what was the name of that place. every time p

the s and p down grade. lightly built into the markets. >> we got those statements that you were talking about with john vause and richard west and candy crowley about the g-7 coming without the boilerplate statement and the ecb saying they will move into the bond buying program. i think the question is will they buy italian bonds and the spanish bonds. for the asian markets here, the real question is what is it going to do to the u.s. dollar? is the dollar going to stay weak because there are so many trading partners here with the u.s. christine? >> all right. excellent. >> live in beijing, what are you seeing? the same story there? the story we've been hearing across the region is, an initial shock opening a couple of percentage points lower. and then not so bad after that. >> reporter: the shanghai market opening lower. modestly so. by about 1%. in the context of emerging markets, that isn't a very big move at all. what people have been saying is the s&p downgrade was baked into the markets. for the most p

credit by the credit rating agency. s&p stripped the u.s. of its perforating, triple-a, giving it a lower grades of what s&p calls a double a+. this s&p downgrade to a double a+ was the u.s.'s first downgrade in its triple-a history. s&p's chairman john chambers says it may take more than a decade before the u.s. gets its triple-a status back. >> we've had five governments that lost their triple-a that got it back. the amount of time it took for those fivene years to 18 years. >> president obama's response. >> no matter what some agency may say, we've always been and always will be a triple-a country. >> the president initiated the blame game in his address monday morning. he blamed the s&p downgrade, then blamed the world, blamed the global economic slowdown, blamed the european dead crisis, blamed the japanese earthquake, blamed the arab spring, blamed washington, and then blamed washington's debated over the debt ceiling. but the markets were not swayed. before the president spoke on monday, the dow was down 385. after he spoke on monday,

lice cling was a raging fad in the 1890's. all of united states, newspapers, magazines were agast about it. they were just talking about it back and forth. was it healthy? was it unhealthy? are they taking over the roads, hazards to health and traffic? and most importantly everybody was very excited about the idea that women were bicycling. they were worried that women might perspire and that was an unhealthy and unfeminine thing. and a lot of women were wearing bloomers, these sort of blousey trousers to help them bicycle. that was thought to be scandalous. but the lady falcons, they didn't care. they were a group of seven married women who went bicycling. they would finish their ride, rest in the long seats there in the clubhouse. they started having dinner parties there. they became quite fashionable. and they sort of tricked it out with all the victorian fill debris they could cox up -- filigri they could come up with, japanese fans, curtains, cushions it became sort of a fashionable, bohemian thing to do that other people

>> it was long-time fiscal outlook for the u.s.. said we are not considering over the 10 year time frame. s&p could move to downgrade to double a status in two years time. behind the scenes, there was an behind of the action. s&p went to the full committee and got the officials in europe to concur hat it needed to move to double a plus . so what you are seeing s&p was committed to a downgrade regardless of what the error was. why? the fiscal picture and dc and infighting that they are calling detrimental to the fiscal out look is not good and interest rates could spike and the economy could weaken further. one final point. treasury officials and federal reserve officials and primary dealers who met on august 3rd essentially said they did

the s&p how pressing it was or not regarding the other crisis. s to be expected or should we dismiss s&p? >> s&p is doing a big favor. this is getting oust hand and this is what i look for. somebody to be a catalyst for action. what we saw in the last week was a sham. to increase the deficit two trillion . biggest voice spoke up in the last week that was the market. if they kept this trajectory you would see the market much much lower. i don't want to see all hell break loose. it is the best thing that could happen. short-term the markets will take a hit. we have to do something about the long-term fiscal health. >> quickly, gary if we do not? >> market is going to be cut in half. we are going to get up to 20 trillion deficit and never pay that back. >> lizzie you agree. >> i don't think cut in half. treasury bond market is a rate of three percent . quickly canada went through it in '94 and fixed it and got triple a back by 19nen. >> it took three years. >> much mauler. >>> and why it moved and controverses approximate since it moved and former ec

john chambers is the managing director of s&p and david beers is ahead of the credit rating of s&p. s&p has been egregiously wrong before, and they are wrong again. the downgrade was not based on so sophisticated analysis of the numbers. indeed, s&p got the numbers wrong, very wrong. friday afternoon, the treasury pointed out to s&p that among the many miscalculations it has been caught making over the years, it had miscalculated our debt on friday by $2 trillion. after s&p accepted treasury's correction of its calculation, s&p went ahead with the downgrade, couching it entirely in political terms. the political brinksmanship of recent months highlights what we see as america's governance and policy making than what we previously believed. the statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. john chambers, who lives in manhattan, and david beers, who lives in london, have no better understanding of the politics and policies of the united states government than you do. in fact, they obviously have much less of a

so that really was attractive to recently freed slaves in the late 1860's in the early 1870's. it also was very attractive to the families of prison inmates who had families that would move up and needed cheap housing because there were basically incarcerated. a lot of families of incarcerated prisoners, free slaves, and a great deal of poor immigrants families. and, again, this area of frankfurt was flooded oftentimes. and so the housing was oftentimes considered dilapidated. a lot of people in the early newspapers were calling for the cleanup of this neighborhood in the 1870's and 80's saying someone should do something about this neighborhood. really, i would say it was a pretty wild place between 1870 in 1930. it had a reputation as being a bad part of town, and during that time, the reputation was probably well-founded. a lot of wild activity. a couple of logging facilities here. it would slow down from eastern kentucky. they would get paid and go crazy for the weekend. and so a lot of the joints and saloons, a lot of the prostitution was actually occurring in this neighbor

that's what's really troubling the s&p. have actually been more successful than we have in putting in long-term austerity programs, thing s that actually bend this curve down. >> snow the chart again. the numbers go up and they go up for a few salient reasons that have nothing to do with pbs or the funding of the arts or home heating oil assistance for the poor. steve, what are driving these numbers up? what is the great risk to america's long-term solvency? >> it's obviously entitlements. that's what's really at the heart of this. and we need to address it. >> and defense spending. >> and the tax code. >> let's talk for a minute about the politics of all of this. here's the irony about all of this. my understanding if the grand bargain had gotten down, the $4 trillion deal had gotten done, we wouldn't have had this happen. the s&p would say, we've made a good faith effort, we'll stick with you for a while. why didn't it happen? the tea party insisted there would be no revenue increases whatsoever in this deal and the obama

we live with the s&p every day. the value of our stocks our portfolio is depending on how the s&p rates it. i think it probably has more to do with the dollar and the value of our dollar. i think gold's going up because of that. that's more of a near term thing that any other unrealistic assessment that we might reanything on it. i think this is really big. this has to do with the toring size of the u.s. debt. the more we read about greece, portugal and spain and italy too in trouble. the more we look at one thing, how's their debt compared to their gdp. by that standard we have problems. we can't keep saying we're different. we have an american exceptionalism at work here. if yoer exceptional, why do we keep rolling up our debt? that's a question i think the liberals, progressives have to deal with. they can't say it's a problem of the idiot right. you can't blame it all on them. there's some idiots on the right. there are some people on the right who will not look at the big picture. >> we're hearing that the presi

dow losing 700 points this week, before the s&p announcement. saudi arabia the first market on earth to trade on this news, since this news it want pretty. stocked down 5 1/2%. the problem is not the downgrade, it is debt that brought it on. a message that seem to the best getting lost. my next guest ron paul on the phone. congressman, you weren't and aren't surprised, but what now? >> it looks like we are in for big trouble because we haven't dealt with the problem. i'm surprised it took them so long to downgrade. i don't think it should have had that rating for a long time. people coming to the realities. you wonder about s&p, because they are usually slow. i think it is very, very bad. it is interesting that when we were working on raising the debt limit over my objections, they kept saying if you don't raise the debt limit we are going to downgrade you. raised the debt limit so they downgrade. which means the spending something not under control. the other thing that bothered me is, i read where s&p said that one of the reasons they downgrade

the downgrade was expected. s&p warned of this months ago and its impact is actually more political and psychological left knee financial. you're seeing a hit to the confidence of the market. some of it may have already been priced in the past few weeks. moody's and fitch haven't followed in the footsteps of s&p. this selling you'll see at the opening bell in about six minutes will probably be a knee-jerk reaction. we'll see the dow plunge into the triple digits. and analysts say the big concern here is that you'll see emotional trading, trading on this fear of the what if, what could happen. and the scary thing is, kyra, it could be a self-fulfilling appro prophecy, especially in the short term. >> you and i just mentioned -- we're talking about possibly a 200-point drop at the open. gold, though, hitting a record high. silver lining here? >> yeah. there is. then you look at treasuries. ten-year treasury bond is falling. that's counter intuitive. think about it. the u.s. government securities, that's exactly what

it backed off to the 1680's, now back to 1693. money around the world is trying to figure out, which place is safest? and i have to tell that you given the problems in europe, japan has a debt problem twice the size of our ratio to gdp. i don't think we want to trust china to be the world's currency. so probably on monday morning, you will see that global scared money coming back to the united states. and the fact that it all wants to be here has pushed interest rates down. not up temporarily. let me take this one step further. if we've got the smart money coming here, putting the money on the banks on friday. some large banks said we're paying you zero interest and you have to give us a fee just for the privilege of leaving your money on deposit. because it is safe here. now don't you think some of that smart money might look around and say, we're getting zero interest but we're in dollars. we want to be in dollars. maybe we should look at some of these big companies. they're paying dividends. they're food companies. they're not

and get into the s&p downgrade and what it means to us. >>shepard: and 47 minute less in the trading day today. you can see the dow is recovering. we ticked up above 11,000 and we will keep this over here for you. we will keep it there throughout the hour and go back as news arounds. first, though, 30 american troops are dead after the taliban forces shot down a military helicopter in afghanistan. many of the troops belonged to seal team six. that is the same commando unit that killed osama bin laden. this was the single deadliest attack on u.s. forces in nearly decade long war. the helicopter down on saturday a few miles south of the capital of kabul. and we are getting information about some of the men what died. pictures of eight of them hear including a 25 year oat petty officer strange of philadelphia. his family says this was the third tour of our longest war in afghanistan. and he recently asked his girlfriend to marry him. >> there were three navy seals yesterday and brought the news. he knew ... he was trained for it. something he

the s&p downgrades the u.s. credit after the markets close and brian shactman weighs in on how wall street may react on monday. >>> a sad and deadly day for u.s. troops in afghanistan. there have been nato troops killed in a helicopter crash. whether there are americans among them, they'll find out. the latest on the breaking news and a live report from kabul straight ahead. roadband experiee to 55 million more americans, many in small towns and rural communities, giving them a new choice. we'll deliver better service, with thousands of new cell sites... for greater access to all the things you want, whenever you want them. it's the at&t network... and what's possible in here is almost impossible to say. captain. unidentified object. it's a cascade complete pac. the best of cascade powder and gel combined in one vessel. fire! ♪ [ mom ] wow! [ female announcer ] cascade complete pacs. love it or your money back. aflac! oh, i've just got major medical... major medical. ...but it helps pay the doctors. pays the doc

the s&p was looking for a $4 trillion deficit cut, and we didn't get that. we have $900 billion on the table so far. we have to wait and see what that super committee is going to come up with in terms of further spending cuts, but we don't know. it may only amount to $2 trillion. basically what s&p is saying is that what the government in the united states has done so far just simply isn't enough to right our finances. deb? >> which is basically, they haven't necessarily created jobs and they haven't put forward a plan to show ow the economy's going to be growing. the s&p did make an error in its calculations, but really, it still decided to downgrade and that's because they kind of had their minds made up, right? >> absolutely. yeah. they may have made an error in terms of -- sort of like a rounding error, really, in terms of the $2 trillion they said the u.s. brought to their attention, but that really didn't make any difference. because the point is, is we're looking down the road. it's about the future of this country. it's about where we're going. will w

they believe that they messed up when it comes to trying to measure the u.s.'s debt to gdp ratio, which is a key measure of a country's credit risk. that's one thing they took issue with. of course it didn't stop the downgrade in the end. officials have noted, though, that fitch, the rating service fitch, and moody's still keep the u.s. at a aaa and so there is hope that maybe this won't play huge in the markets. certainly you can bet that the white house, the treasury department, administration officials will be watching this closely and figuring out how to respond. >> i think the president signing the debt deal alone in his office, no fanfare, nobody around him. he called it a manufactured crisis. something that could have been avoided entirely. what kind of pressure does this put on congress? >> well, it puts a lot of pressure on congress, and you know what you just said, the president talking, it echos what chambers said from s&p. this whole issue was -- ended up being a political football. the congress couldn't agree, the debt ceiling, the threat of default

i think the s&p quite rightly said, this is no way to run a country. and this means that the united states is set up for repetitions of the battle that we just had, which was really -- it was a political owned goal. we didn't have a situation in the united states, which countries often face when they're running into fiscal problems, that it's the market saying, come on, guys, get your act together, otherwise we're in trouble. the problems of this summer were a political owned goal. they were structurally created. and that's something i think the s&p pointed to saying, this is a weakness going forward. >> i want to ask you, ken -- we're going to speak to muhammad al aryan of pimco in a few later on in the show. there are countries you can get more money for lending that country money than you can the united states. but they don't have enough debt lying around to really replace the united states as this safe bet. do you think the united states today is a riskier bet than it was yesterday? and by the way, that's that list of countries that are rated aaa by

how much of this, steve, do you think is because of the s&p downgrade, the white house has attacked the s&p saying this is meaningless and got their math wrong but how is everyone reacting. >> we must not forget the s&p warned us back in april they could do this. the market was well prepared for what they were about to do regardless of the politics back in washington. the fact remains though this isn't just the u.s. debt crisis. it's also about what is going on in europe. not about greece or ireland but about the center, italy, which are the third and fourth largest economies in europe. not only the u.s. concerns but what we've got here in europe here. >> what does it mean the european central bank is buying government bonds in those countries you mentioned, italy and spain? >> well, what it should do is take them away from crisis because in they aren't buying bonds and no one else is it means the yields, the price those governments have got to pay to borrow money have been going up and they've been going up to above 6% which is near the crisis levels that portugal and ireland found the

the b line and the a line where there until the mid-1950's. we are taking the street cars away, but bart will come out here and everything will be fine. >> downtown, gary ave. >> when you get past it, it becomes gary boulevard. >> they wanted streets to be large, they should have vegetation and trees, they should be ornamental. gary strieker was the main road from the 1850's. -- gary street was the main road from the 18th of the's. >> it was planned as a major thoroughfare. >> it was a toll road originally. we make people pay to get on the road and we make them pay when they get to the clubhouse. it was a toll road. >> i think that does it for today. thank you for coming and sharing your information and great knowledge. we will see you next y >> the next time you take a muni bus or train, there could be new technology that could make it easier to get to your destination. many are taking a position of next bus technology now in use around the city. updated at regular intervals from the comfort of their home or workplace. next bus uses satellite

the b line and the a line where there until the mid-1950's. we are taking the street cars away, but bart will come out here and everything will be fine. >> downtown, gary ave. >> when you get past it, it becomes gary boulevard. >> they wanted streets to be large, they should have vegetation and trees, they should be ornamental. gary strieker was the main road from the 1850's. -- gary street was the main road from the 18th of the's. >> it was planned as a major thoroughfare. >> it was a toll road originally. we make people pay to get on the road and we make them pay when they get to the clubhouse. it was a toll road. >> i think that does it for today. thank you for coming and sharing your information and great knowledge. we will see you next yy

>> that's exactly what the administration said. s&p says they're wrong, they don't have it right, they made a minor change to their calculations but kept that rating aa-plus on and said look, the real problem is that washington can't come to a conclusion. they can't move forward. this is a political problem. you need to solve it. we have to have relief of the debt and as john said, he had it just right, no surprise we're getting downgraded. if you have watched the numbers at all. our entire federal debt, $14 trillion, is the same size as the total output you are our economy, it's just unsustainable. alisyn: if there's no surprise why aren't the other agencies downgrading us? >> that's true but i got to tell you, moody's is saying we may come out before 2013 and downgrade you, so they are warning we may be in for yet another downgrade. remember all the companies, they make their decisions on the basis of different rationale, they have their own way of calculating these numbers. so they have different decisions here and i think you mig

credit rating downgraded by the s&p. obama we got news will speak with reporters and address the downgrade as well as this deadly helicopter crash in afghanistan coming up at 1:00. >>> joining me is assistant minority leader and member of the congressional black caucus, jim clyburn. we've been talking about the downgrade and we also want to talk about the convention taking place across the country, trying to get americans back to work. first, your reaction to the downgrade and how the government can restore confidence in its ability to govern. >> well, first of all, thank you for having me, thomas. well, let me begin by saying, this is very unfortunate. i think it's undeserved. but i don't think it was unexpected. i think that those of us who have been watching this, the s&p, finch, as well as moody's, had the feeling that s&p might do something like this. i don't believe it's deserved at all. i think if you look at their reasoning, it didn't seem to focus as much on economics as it did on the political activities that we

in the late 60's and the early 70's, the bourbon industry went through a huge decline. you had a generation of people that were saying don't trust anybody over 30 and we aren't going to drink what our parents drink and most of what their parents drink or bourbon, rye, scotch or whiskey. they start experimenting with other new products such as vodka and tequila. to products the government didn't bother to keep track of until 1970. because there were few sales of it. so, the industry was in a huge decline until the 1980's and it really is the single most scotch industry that helps bring bourbon back because one of the things people were drinking or whine, and they were having wine tastings and dinners and they had magazines devoted to wind and people writing books about wine and things like that. well the scotch whisky industry decided to show people that the single whiskey's which were fairly uncommon in the united states before the 1970's, the late 70's and early 80's. they started having whiskey vendors and tastings and started encouraging books and magazine articles a

much of what one sees during the 1940's. ebony and the american negro exposition, which i write about in my first chapter. some of the different initiatives to attempt to bring african americans in greater alignment with the market is a puzzling over how to make this term incredible in the face of a much longer history in which black folks were faced with the heritage of their enslavement within the united states. i think to some degree today telling well past the span of this book and thinking about what kind of lessons it brings up in the present-day, the fact that we still see many african-americans are economically dispossessed and put in situations where they really do not have the capacity to exercise initiatives, transform lives. incarcerated, and places in which jobs are very difficult to come by. places in which the wage scale or cost make it difficult for one to realize the kind of viable economic condition, these, in a sense, remind us that coming into the market is not a surly a whole the empower in turn for indiv

and you are an expert on the 60's and my question is don't people remember the 60's? aside from the clich don't kids now learn about history in that period? >> why can that kind of thing been cavalierly said by someone that should know better? >> iso steed on the research in the 60's that it doesn't seem to me people don't know a lot about it, that just might be that my own idiosyncratic perspective. the fact that these papers pay such total suppression from the police and the fbi and everything else it does surprise me that a lot of people that have protected the free-speech rights generally in the press seem to overlook or ignore the weight of these were targeted or her last but i think that it's very large and our culture and politics and i think a lot of political issues today are reflections of how people feel about the 60's. bill clinton said something on these lines. he said if you take a person today and ask them do you think that there is more harm than good done in the 60's you are more likely to be a conservative republican and if you think on the balanc

we start with today's trading of the s&p 500. pull out and roll out. prices tried to stabilize in the mid-afternoon and sank to new session lows into the closing bell. here we go, with the day's trading. let's put the drop in context. here is the s&p 500 over the past year. the index is down almost 7% in the past week and a half. today's selling takes us below the low in june and below its march low. over the past 12 months, the index is up 11%. meantime, a lot of buying interest in uncle sam's debt. here we have the interest rate on the 10-year government i.o.u. rates plunged today, falling to its lowest level of the year. 2.6%. lower rates mean higher prices as people buy up bonds. the fear factor over a weak economy also helped metal prices. there's that gold price yet again. gold continues hitting new highs, at $16.43 an ounce. silver closed back over $40 an ounce. the soft economy concerns pushed oil lower. light sweet u.s. crude fell more than $1 per barrel. the day the government agreed to raise its borrowing limit hoping to avoid a credit rating

that's one of the s bring for. to congresswoman bachmann or any other candidate, one of the minimum prerequisites to being the next president is you have executive experience that you have run a large enterprise or the public component. i've done that my comments about her record, if you look at her record in congress there's great comments, offering amendments that didn't pass and the like. asening tos we are concerned about, cutting -- as to concerns we -- accomplishing these things, getting results, i said her record is nonexist ten that is not disputable, that is a matter of fact. >> chris: she was in the minority, she couldn't defeat obama care by herself. >> we are all held to our results. whether you have talked about it, given it rhetoric one of the themes in this race is going to be after barack obama he came through iowa and other places gave soaring speeches, incredible comments people hear democrats bought it in iowa they catapulted him to the president. we now know he wasn't prepared. he hadn't run anyt

the u.s. government. s&p. bonds to fall and for interest rates to rise, because they're saying, that asset class isn't as good as we thought. today everyone rushed into that place that s&p said was dangerous. interest rates have fallen, people have been flooding into government bonds. they've been selling stocks. what that tells me is that, nots so much people are ignoring s&p. it's that the fear is over slow growth of the economy at home and abroad. >> when we look at what the s&p has done, do we give them too much political clout? >> well, the question of how much you pay attention to them. it's like saying, a columnist or pundit says something and then there's reaction. are we endowing them with too much power? it's with our power as a market, as investors, as media to ignore them, because they have been wrong on so many things in the past, including in the mortgage crisis stamping aaa ratings on bonds that were worthless in a matter of monthsens. >> notoriously mistakes in the past but helds ourselves acco

the nasdaq tumbled 101 points and the s&p 500 fell 52. volume remained heavy. on the big board, 2.1 billion shares were traded, and 3.3 billion on the nasdaq. so where do stocks go from here? suzanne pratt reports. >> reporter: on wall street these days, what goes down must go up. and down. and up. and so on. experts say vertigo is the new normal for stock investors, and that's unlikely to change until there's clarity on the global economy. today's worry? france and its biggest bank, societe generale. there's concern s&p will downgrade the bank, too. as a result, financial stocks in the u.s. led the selloff as investors fretted trouble with europe's banks could spill across the pond. n.y.s.e. floor broker doreen mogavero says sentiment is very negative. >> there's really no panic. we've seen no panic here at all. it's been very orderly, but, i think people are really reassessing their positions in the market. >> reporter: so what's an investor to do in this frightening and volatile trading environment? experts say that depends on the strength of their stomach, a

the global selloff continues right now. and s&p's john chambers explains his organization's decision. >> we have a negative outlook fixed to a longer time frame from six months to 24 months. if the fiscal position of the united states deteriorates further, or if the plirtical gridlock becomes more entrenched that could lead to a downgrade. >> i think s&p has shown really terrible judgment. they've handled themselves very poorly. they've showed a stunning lack of knowledge about basic u.s. fiscal math. i think they've drawn the wrong conclusion. >> we have a cnbc contributor. it's not just the s&p now, moody's has warned it too might downgrade the u.s. credit rating. these are credit rating agencies that have been wrong before, 2007, 2008, should their word on this matter? >> it does to a certain extent, contessa to the degree that institutional investors and others have to weigh those ratings particularly since some institutions although it's not the case right now can only own aaa securities banks could have been forced to sell.

the white house also saying there was a major or in all of this on friday. s&p came to the white house according to those close came to the treasury department saying this is our accounting we are going to drown grade you you are off by $2 trillion. standard and pours came back brought that estimate up by the 2 trillion but still downgraded the u.s. anyway. you have gene sperlg type white house advisor saying the magnitude of the error despite the unwillingness to change on the spot says this is politically motivated. republicans are staying this shows an unwillingness by the administration to cut we need to continue to cut spending and they refuse to raise taxes. democrats saying it's republicans in theory if you sayal to raise taxes on families earning more than 250,000 each year is the stumbling block in all of this and causes in effect tomorrow house democratic leader nancy pelosi is holding a forum to discuss democrat's commitment to protecting medicare, medicaid and social security. republicans say you have got to put the entitlements on the table if you

the s&p 500 lost 80. the nasdaq fell 175.de is seen as repudiation of partisan fighting in washington. but chief congressional correspondent mike emanuel tells us there are more battles ahead. >> s&p's decision to downgrade the credit rating sets the stage for bruising political fights over fiscal matters this fall. president obama says he hopes the downgrade leads to greater political will in washington. >> my hope is friday's news will give us a sense of urgency. i intend to present my recommendations in the coming weeks on how we should procee proceed. >> paul ryan said house republicans did their part and was not surprised by the s&p action. >> because washington has not gotten the fiscal house in order. to me, this is vindication of the action. we passed a budget according to somebody from s&p to prevent it from happening in the first place. >> this puts pressure on the super committee of 12 lawmakers. the job is to find $1.5 trillion in cuts as part of the debt compromise, but ryan says it could be difficult to achieve

the s&p downgrade just the latest blow on the economic and political front this week.t happy. according to a cnn orc poll conducted after the debt deal was announced, americans say 77% of elected officials who dealt with the debt ceiling acted like spoiled children. as you might imagine, those polled don't think much of the job congress is doing. according to the cnn orc poll, 84% say they disapprove of the job congress is doing. joining me now to talk about the world of power politics, democratic strategist maria cardona in washington and republican strategist, lenny mcallister in chicago. so, both of you, the economy not doing so hot. congress left town for a break and everybody gets a vacation, i get that, but the president's been holding campaign fund-raisers. who is showing leadership? is this all about spin now? let's go to you first, lenny. >> i don't think anybody's showing leadership. i think, unfortunately, we're looking at somebody that's not the commander in chief or economist in chief, we're more looking at the campaigner in chief, and this has been one of