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How the downgrade affects the national mindset

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JEREMY HOBSON: Well, markets aside, there is the question of the bruised national ego from this downgrade — Marketplace’s Jeff Horwich has that part of the story.

JEFF HORWICH: The same factors visible to S&P have been visible to everyone else: shaky economic recovery, political disfunction, growing public debt. Which is why former Fed Chairman Alan Greenspan said on NBC’s Meet The Press the damage from the downgrade is mostly in our heads.

ALAN GREENSPAN: What I think the S&P thing did was to hit a nerve. And its hit the self-esteem of the United States, the psyche. And it’s having am much profounder effect than I conceived could happen.

Well get over it. You know the expression, sticks and stones and all that. Analyst Greg McBride of says the downgrade is kind of like a stone — in the water.

GREG MCBRIDE: It’s going to ripple out in in all directions. However we haven’t exactly had calm financial seas over the past several weeks. So what’s happened is we’ve dropped the rock into the water, but we’ve done it when waves are six feet high.

As for our pride, few things are more resilient than the American ego. But the downgrade is a harsh reminder of the reasons S&P decided to hurt our feelings: and those don’t seem to be going anywhere.

I’m Jeff Horwich for Marketplace.

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