I’ve been stating for quite sometime (see my other blogs) that its only a matter of time before the United States gets a downgrade of its debt. There was no way that the spiraling out of control debt with a decrease in revenues wasn’t going to affect its ratings. This has long-term ramifications for the U.S. Govt. (such as borrowing, etc.) It MUST cut expenses and increase revenues. With the potential of the United States heading towards a “double-dip” recession, the outlook isn’t too positive.
It will be interesting to see how this affects the various markets next week. As I mentioned in my previous blog, the markets now have a “bearish tone” to them. I will be somewhat (though not completely) surprised if the U.S. equities market doesn’t decline. I also expect other currencies to appreciate against the U.S. Dollar. Of course, only time will tell what will happen.
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“One of the top credit rating agencies, Standard & Poor’s, has downgraded the United States’ top-notch AAA rating for the first time ever. S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits”.
http://www.bbc.co.uk/news/world-us-canada-14428930
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“”The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,”"
http://www.marketwatch.com/story/us-loses-triple-a-rating-from-sp-2011-08-05
Tags: S&P ratings, U.S. debt
