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Posted at 06:00 AM ET, 08/08/2011

The downgrading of America


George Washington on the front of the one dollar bill. (KAREN BLEIER - AFP/GETTY IMAGES)

It’s the first Monday in American history where the “land of the free and the home of the brave” is sans its AAA Standard & Poor’s rating. But the larger trend of bad economic news is worrisome across the board, and the United States’ capability to develop the latest and greatest products and ideas is on the line.

After all, the United States is not the only entity suffering under the weight of a downgrade. The Post’s Vivek Wadhwa sat with “Bloomberg West” on Friday — before the S&P announcement — to discuss the impact of Thursday’s market swoon and what it means for the technology market place. Wadhwa didn’t back down from his original assessment that the social media bubble is here and getting ready to pop with dire consequences for innovation in the technology sector.

That prediction was given all the more weight with Morgan Stanley’s downgrade of the highly-valued social media company LinkedIn on Friday. Morgan Stanley was LinkedIn’s lead underwriter when it went public in May, but the company’s analysts downgraded their recommendation for LinkedIn from a buy-equivalent to a hold-equivalent rating, according to The Wall Street Journal.

“If I was a Facebook secondary markets owner, I’d be really, really, really worried right now,” Wadhwa said.

Indeed, there’s no shortage of worry when it comes to the U.S. economy right now.

All of this downgrade talk, from Wall Street to Washington to Silicon Valley, raises the question of America’s ability to innovate in the future. None of this bad news erases the record sales of Apple’s iPad, or the potential discovery of water on Mars. But can these technological breakthroughs continue to be made if the “full faith and credit of the United States” and the record-high valuations of companies in one of the nation’s newest economic sectors are shrouded in doubt?

— What do you think? Does the S&P downgrade combined with fears of a social media bubble create a significant threat to the future of American innovation? Or does the downturn create fertile ground for greater opportunity? We'll be following #downgrade for your feedback.

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By  |  06:00 AM ET, 08/08/2011

Categories:  Business, Morning Read, Technology, Video

 
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