CNN news 2011-08-16
Standing outside CNN's world headquarters in Atlanta, Georgia, my name is Carl Azuz, and I welcome you to CNN Student News, kicking off its 2011-2012 school year!
First Up: The Downgrade
Every day on CNN Student News, we bring headlines from around the world right into your classroom. We do it without any commercials. First up today, we're going to look back and ahead.
What we're talking about is the U.S. economy, and we're starting with something called the debt ceiling. Debt is the amount of money that a person, company or government owes. The debt ceiling is this limit on how much debt a country can have. The U.S. hit that limit earlier this year, and there were concerns that if the government went over that debt ceiling, it wouldn't be able to pay some of its bills.
President Obama and members of Congress had a tense debate over the Summer about the idea of raising the country's debt limit. There were strong disagreements over how to make a deal or even if there should be one. A deal was passed on August 2nd. It raised the U.S. debt ceiling and set up some government spending cuts to help lower the country's debt down the road.
But as you know, actions can have reactions. Credit rating agencies give countries grades based on their ability or how willing they are to pay off their debts. One of the major agencies，Standard and Poor's -- downgraded the U.S. from a AAA rating to a AA+. Ali Velshi is going to help explain that for us in just a second.
But that downgrade, along with some other factors, sent shock waves through the stock market.Last week was a roller coaster ride: big ups and downs. Experts are predicting that this week will be the same. Now, we're gonna get back to that credit rating. Ali Velshi is here to talk about why the U.S. was downgraded and what in the world that means.
Standard and Poor's lowered the U.S. from a AAA credit rating -- the best in the world, and the only one the U.S. has ever had -- to AA+. They said they downgraded the U.S. for two reasons. One is that the debt ceiling deal didn't go far enough: it didn't cut far enough and it didn't raise taxes. The other problem is political. They said that the United States has not demonstrated the ability to get its political house in order and make sound decisions about its budgeting.
Standard and Poor's is the full name; it's a credit rating agency.You've got those for your own personal credit,but globally there are three of them: S&P, Standard and Poor's, Moody's and Fitch.And basically, they assign every company,every publicly traded company, and every country a debt rating. A debt rating is the risk associated with lending that company or that country money.
You know, prior to this whole debacle, I think most people thought AAA was a battery size. Let me tell you what the difference is between AAA and AA+. AAA credit rating means extremely strong capacity to meet its financial commitments.That is the highest rating that S&P can give a country or a company. AA+ means very strong capacity to meet its financial obligations.That differs from the highest rating by just that little word: extremely strong and very strong. Even after a downgrade of the U.S. credit rating,the United States could borrow at a lower interest rate than it could before the downgrade.That's because comparatively, the U.S. is still one of the best and safest bets out there.
All right, our next story today: A "freakish accident" is how Indiana Governor Mitch Daniels described what happened at the State Fair this past Saturday. Around 8:45 p.m., a police captain got on stage to warn the crowd to find cover. Just minutes later, a powerful storm blew in, causing the concert stage to collapse. At least five people were killed. Dozens of others were hurt. What was good in all of this, though, was that many people who weren't hurt rushed into the area to try and help. Witnesses said folks were trying to lift the scaffolding back up, while others searched for victims and pulled people back out of the wreckage