What is it about August? In searching for an analogy for America's downgrade from AAA credit to AA+, I'm fixating on the sacking of Rome, August 24, 410.
It was the first time the city had been taken by an enemy in 800 years. Even though the capital of the western empire had moved years earlier, and the eastern empire had split off and would last as a separate entity for another thousand years, the sacking of 410 was a blow from which the western empire would never fully recover.
The Visigoths attacked and looted the city for three days and then withdrew. The sacking ended, but what also ended was the idea that Rome was invulnerable. Other enemies took note, and a second sacking took place in 455 and the western empire ended in 476.
Despite the overheated "blame the messenger" rhetoric of this weekend, Standard & Poor's are not the Visigoths. But they have delivered the message that America is not invulnerable. Who will take note of that fact and take action? Our credit rating and stock market may recover in the near term, but larger changes are needed to avoid the same fate of that civilization from 1,600 years ago.
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