Personally, I think S&P's decision to drop America's AAA credit rating down to AA+ was the right decision. Someone needed to call us out on our bullshit. S&P said months ago that, to keep our AAA credit rating, we needed to raise the debt ceiling a develop a “creditable” plan to tackle the nation's long-term debt.
We managed to strike a deal that allowed us to raise the debt ceiling, but that's all we did. We have yet to come up with a way to fix our debt problems. The important thing is that S&P didn't say “Well they tried, so they can keep their credit rating.” Instead, they are holding America accountable for it's actions, which is what should have been done ages ago. Whats the point of having a “debt ceiling” if we're going to continue to raise it? We raised the debt ceiling 7 times while George W. Bush was president – that's 7 times in 8 years.
America could be the greatest country on Earth (I think it already is, but thats just my patriotism talking) if we stopped wasting money and came up with an effective plan to start tackling our problems one by one. We have a lot of work to do and hopefully losing our AAA credit rating will get the ball rolling.
Having said that, I don't think American's understand how fortunate they are. This is the place where we get clean water and electricity 24/7, women can drive, people can criticize their govt. and not be killed for it and there is an awesome mix of culture and opportunity. The current state of the U.S doesn't bother as much. This is still the place I want to be and raise my children.
I don't think America has lost it's stand in the world. People may judge America but given the chance most people across the world would want to move here :)
I'm becoming increasingly convinced that the US just isn't interested in being a serious country any more, at least politically. Everything is is oriented towards posturing and signaling rather than delivering results.
Outside politics, I still have immense faith in America. My wife (who is Swiss) was able to come here and build a business that she would have had no real opportunity to even start in Switzerland.