PIGS, BRIC, AAA and douple dips

It seems like nobody can do math, at least in the financial world. Definitely, nobody can do history, it seems.

Standard & Poor is going to kick the United States off the AAA ratings bandwagon. The Treasury Department says it's bad math on S&P's part that's leading to this possible decision.

After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.

S&P officials later called administration officials back to say they agreed about the mistakes, though they didn't say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do.

Answer, per the top link? S&P said it was acting anyway.

The kicker, per the first link? S&P threatens further downgrades. That all said, this is in the face of everybody saying the debt deal is going to hurt the short-term economy.

Oh, and Obama? Maybe you're more financially naive than Bill Clinton and his hypocritical comment (he knew better) about being held hostage by the bond market. That said, with the Wall Street insiders in your administration, that petard you hear cranking is your own.

You have no room for economic populism, and it would sound phony if you tried.

That said, what does this all mean?

It wouldn't hurt most domestic investors; as long as at least one ratings agency has the U.S. at AAA, they can hold Treasurys, etc.

Internationally? Another story. The Swiss franc is probably going to go through the roof. The renmimbi in China could come under inflationary pressures too tough for that regime to totally resist. (More on that below.) And, supposedly, rumor of S&P's possible move was part of what was behind Friday's wild stock gyrations.

Basically, "austerity" risks becoming the new "Smoot-Hawley tariff," the Great (double-dip) Recession's answer to Great Depression stupidity.

Meanwhile, speaking of Europe and markets?

The "PIGS" of Portugal, Italy, Greece and Spain have a new "most sickly" member, perhaps. Italy's chance of default on its debt is reportedly now at 50 percent. Yes, American analysts may claim it's not as big a deal as our own 2008 implosion, but, with the southern half of the Eurozone struggling in general, it might not be minor.

But, it's not just PIGS stressing the global economy.

BRIC nations may have their own woes. Brazil has joined China in battling inflation; another reason behind the Dow's swirling was worries over both their economies.

Yet, while still lethargic, U.S. job growth in July reportedly was at least better than anemic.

So, are we still facing a double-dip recession?

I'd put the odds still around 50 percent, but it could be with a trough more than a deep plunge, and with no more than two quarters of technical recession. That said, it's clearly a muddle.

There's a spate of other could be good/could be bad news out there. Italy says it will balance its budget by 2013 - but will include a balanced budget amendment to its constitution. Consumers increased their borrowing in July, but whether out of economic confidence or economic need is still unclear.

And understanding this muddle depends in part on whether or not S&P pulls its horns back in.

That said, what if it doesn't, the U.S. economy and investments therein stay no worse than now, and Moody's and Fitch's stay at U.S.-AAA? How much of a ding does S&P take?

And, given the Debtmageddon crap we just saw, what happens between Obama and Congress next month? How much more intransigent do Congressional tea partiers get? How much more backbone does Obama lose?