On Friday, August 5, 2011, after the market closed, S&P did something no one had ever dared to do before: it cut the U.S. credit rating from AAA to AA+, the first time in history.
America had held that AAA badge for 70 years. The Treasury immediately said S&P had gotten its math wrong by $2 trillion. S&P actually admitted the mistake—but cut the rating anyway.
When the market opened Monday, the Dow plunged 634.76 points, or 5.5%, to close at 10,809.85; the S&P 500 fell 6.7% to 1,119.46, and the Nasdaq dropped 6.9% to 2,357.69. Global stock markets lost about $2.5 trillion in a single day. On Tuesday, the Dow bounced 430 points; on Wednesday, it gave back 519. Two days of getting slapped back and forth.
The most surreal part came next. The thing that had been downgraded—U.S. Treasuries—actually rallied, with the 10-year yield plunging to 2.17%, an all-time low. Gold surged to $1,720.80 that day, then broke $1,750 and set a record. The VIX shot straight up to 48%.
On August 8, Obama said at the White House: “We always have been, and always will be, an AAA country.” Buffett chimed in beside him: “If there were an AAAA, I’d give America an AAAA.”
Eighteen days later, S&P CEO Deven Sharma stepped down.
Today, Bitcoin is hovering around 75,300. Yesterday it wicked down to 73,510; the range has broken, and CPI is due tomorrow night at 21:30. Back in 2011, the bonds that got downgraded ended up being the hottest thing in the room. So tell me: was the rating wrong, or does the market simply not believe in ratings at all?
$BTC $ETH $BNB
America had held that AAA badge for 70 years. The Treasury immediately said S&P had gotten its math wrong by $2 trillion. S&P actually admitted the mistake—but cut the rating anyway.
When the market opened Monday, the Dow plunged 634.76 points, or 5.5%, to close at 10,809.85; the S&P 500 fell 6.7% to 1,119.46, and the Nasdaq dropped 6.9% to 2,357.69. Global stock markets lost about $2.5 trillion in a single day. On Tuesday, the Dow bounced 430 points; on Wednesday, it gave back 519. Two days of getting slapped back and forth.
The most surreal part came next. The thing that had been downgraded—U.S. Treasuries—actually rallied, with the 10-year yield plunging to 2.17%, an all-time low. Gold surged to $1,720.80 that day, then broke $1,750 and set a record. The VIX shot straight up to 48%.
On August 8, Obama said at the White House: “We always have been, and always will be, an AAA country.” Buffett chimed in beside him: “If there were an AAAA, I’d give America an AAAA.”
Eighteen days later, S&P CEO Deven Sharma stepped down.
Today, Bitcoin is hovering around 75,300. Yesterday it wicked down to 73,510; the range has broken, and CPI is due tomorrow night at 21:30. Back in 2011, the bonds that got downgraded ended up being the hottest thing in the room. So tell me: was the rating wrong, or does the market simply not believe in ratings at all?
$BTC $ETH $BNB
