No clear way forward in light of S&P downgrade - WMC Action News 5 - Memphis, Tennessee

No clear way forward in light of S&P downgrade

(CNN) - The stock markets overseas struggled again Tuesday as the fallout continues from Standard and Poor's (S&P) downgrade of U.S. debt last week.

On Tuesday, Federal Reserve Chairman Ben Bernanke will attend his first FRB meeting since the S&P downgrade from AAA to AA+.

S&P said the battle over raising the debt ceiling did not show the fiscal policy discipline of a AAA nation.

Monday's market meltdown has heightened fears of another recession.

As stocks plunged, President Barack Obama sought to reassure the public by saying the issues S&P noted were fixable.

Treasury bonds actually did do well Monday, which is a sign investors still see U.S. debt as a safe haven.

"At the end of the day, you cannot do something with nothing. And even though the U.S. government's market has been downgraded, it is still the biggest and the most liquid," said Mohamed El Erian, CEO of PIMCO.

Obama has proposed extending a payroll tax cut and extending unemployment insurance. He has also sought to increase tax revenue, but House Majority Leader Eric Cantor told fellow Republicans to resist pressure to increase taxes as a way to get the deficit under control.

In the wake of S&P actions, the Republican National Committee has called for the dismissal of Treasury Secretary Tim Geithner. Geithner had said publically that there was no risk the U.S. would lose its status.

The White House said he'll be staying put.

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