Wall Street plummets in the wake of the U.S. debt downgrade

Monday, August 8, 2011 - 2:06pm

Traders were running scared on Wall Street and around the world this morning in the first trading after S&P downgraded the U.S. debt.

The Dow opened sharply lower and plunged 300 points in the first hour following abysmal sessions across Asia and Europe.

President obama insists U.S. credit is still good.

President Obama said "no matter what some agency may say, we've always been and always will be a AAA country."

And he says the debt downgrade increases the urgency for Washington to find a political middle ground.

President Obama said "here's the good news: our problems are imminently solveable."

The United States was dropped from AAA to AA+ and S&P warns it could further downgrade U.S. debt this fall if Congress can't agree on more spending cuts.

David Beers of Standard & Poor's says "we've made a judgment that we don't think based upon what we can see now, that there's gonna be another bite at this apple of deficit reduction any time soon."

S&P took more action today to downgrade Fannie Mae, Freddie Mac, and some other government-backed debt, the first in an expected series of ripple effects.

Gold, a traditional safe-haven, shot to a record $1,700 an ounce this morning. For the United States a crisis of confidence for which markets and traders around the world are paying a steep price.

Now the world is waiting to see whether congress can put aside politics and make the cuts needed to prevent further damage. Drag WindowClose Window Download Multiple Files

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