What Does debts rating means?

Only 13 countries in the world have an AAA and stable rating, among them Switzerland, Hong Kong, Britain and Australia. Malaysia is rated A- and stable while Spain is rated AA and negative. Only four (non-financial) companies in the US still have an AAA credit rating: Automatic Data Processing, Exxon Mobil, Johnson & Johnson and Microsoft. These ratings, rooted in a certain conservatism, have become more of an economic straightjacket than an actual path for progress. They are there to maintain the status quo. To keep both companies and countries in check, to maintain a certain level of certainty and reliability.

For Standard & Poor's, making the call is a reaffirmation of their relevance. In that they could not just make the threat and then not follow through. How would that look? It was a power play. It was them telling America to get its act together, to sort out its politics or face further downgrades. It was them seeing just how far they could stretch their influence. It was them grasping for some kind of independence. Especially when one is in a pay-to-play relationship with those they are rating. This downgrade is more than just a warning to American politicians, it is Standard and Poor's acknowledgement of an inevitable shift in the global balance of economic power.

For America, their reaction to the downgrade will ultimately determine what it means. Because they could very well ignore Standard & Poor's and just carry on with business as usual. They could underplay their influence (much like they do from time to time with other institutions like the United Nations), thereby making the world choose between them and the ratings agencies.

For the politicians, America losing its coveted AAA rating is a blow to national pride, which, ironically, could turn out to be more damaging for President Barack Obama than any increase in interest rates and borrowing costs. For it has emboldened the Right who, for the moment, seem to have conveniently forgotten that it was their rampantly out-of-control spending over the past decade that resulted in America's dire straits. Their statements, from John Boehner's denigration of Washington's spending habits to Michelle Bachmann's call for Timothy Geithner's resignation, smack of electioneering and political leveraging rather than providing any actual insight or constructive criticism. In fact, it displays such a lack of self awareness that it borders on the ridiculous.

For China, it was a coming out party. The Xinhua news agency reported: "China, the largest creditor of the world's sole superpower, has every right now to demand the US to address its structural debt problems and ensure the safety of China's dollar assets. To cure its addiction to debt, the US has to re-establish the common sense principle that one should live within its means."

It was an unprecedented statement. Why? Because friends and allies don't tell each other off. Despite how much money they owe you. This was the opportunity that China was waiting for. To test the waters. To make a leadership statement. To see how the world reacts.

The silver lining in all of this is that such a downgrade may just be what America needs to kick start a proper conversation about fiscal policy. To go beyond the ideologies of Right and Left, and maybe find an alternative. Because what they're doing now clearly isn't working. Because what they need is a new discourse on spending. Because what they need is a more intelligent tax policy.