Turmoil in the financial markets has coincided with an annual fishing trip for economists and top executives deep in the woods of Maine near the Canadian border. While the economists were together, Standard and Poor's took the unprecedented step of downgrading the U.S. government's credit rating.
Every year at this retreat by Grand Lake Stream some of the top minds in finance gather to go fishing in canoes with guides, catch up with each other and put their heads together about the state of the nation's economy. Some work for firms where they're not supposed to make public statements or forecasts.
"Here there's no such limitation," says Barry Ritholtz, director of research at the money management firm Fusion IQ. "People speak more honestly. I get to go out with guys and see what they really think."
"What's interesting this year, there's a pretty broad distribution of opinions," says Ritholtz, who also writes about investing. "It's not clear that everyone is bullish or bearish. I think there are expectations of a slowing economy increasing expectations of recession from the crowd."
Opinions vary widely on how bad this current slow patch in the economic recovery will be. As they do with regard to the downgrade of U.S. Treasuries by the ratings firm S&P.
Since Friday night, the economists, hedge fund managers and analysts have been talking about it constantly.
"The downgrade was a mistake," says Nouriel Roubini, a NYU professor who famously predicted the housing market crash and recession before the vast majority of other economists. "S&P could have waited a few months to see whether Democrats and Republicans reached an agreement on deficit reduction."
Roubini believes that in this fragile economic environment the downgrade could cause unnecessary damage.
"It's gonna cause more stock market correction. It's going to reduce business, consumer and corporate confidence. It's going to increase the risk of a double-dip recession, if not insure it," he adds.
Some people at the retreat wonder whether S&P might be over-reaching — being too aggressive with ratings now, after being far too lax a few years ago. The major ratings firms give AAA ratings to securities that were in fact quite risky in the run-up to the financial crisis.
"Is this a cover for the fact they missed the whole AAA thing and they missed the subprime, and they were in fact helping spawn it," asks John Mauldin, president of Millennium Wave Investments, who has written a book about the sovereign debt problem.
"To suggest that the United States is in a place yet where we're not going to pay our bills seems to me rather preposterous," he adds.
One of the best known and respected executives in the financial world, who did not want to be quoted directly, said he thought the ratings downgrade would probably cause a little short-term market turmoil. But after that it wouldn't really be a big deal at all.
And some economists thought the downgrade could send a message to lawmakers to get serious about coming up with a long-term debt reduction plan.
"What the ratings agency has done is said if you want to sit in Washington and act like fools, we are going to call you on it," says Cumberland Advisors chief economist David Kotok, who organized the retreat. "Good for S&P."
As far what this all means for the stock market this week, there was disagreement there too.
That led to some friendly wagering during lunch about whether the Dow will close down more than 300 points Monday. So it turns out making bets on the economy is how economists have fun.