Standard And Poor’s
August 6, 2011 by USA Post
Standard And Poor’s, Standard & Poors said Friday it downgraded the credit rating of the United States for the first time, giving a symbolic blow to the world’s economic superpower in what was a strongly worded criticism of the American political system.
The downgrade of the country one notch below Triple A credit rating company, said “brinkmanship” in the debate on the debt had the ability of U.S. government to manage their finances’ less stable, less efficient and less predictable. ” He said the bipartisan agreement reached this week to find at least and 2.1 billion in savings in the budget was reduced below what is necessary to dominate the nation’s debt over time and predicted that leaders are not likely achieve greater savings in the future.
“Whenever possible the rating will come back, but I think it will return in the short term,” said David Beers, head of the S & P sovereign rating unit of debt.
The decision came after an afternoon of heated debate between the Obama and S & P. Administration officials said the S & Panlysis of the possibility of a political agreement was flawed and that the initial report contained mathematical errors – the company had overstated the U.S. deficit more than 10 years and 2 billion dollars.
“A trial flawed by an error, and 2000000000000 speaks for itself,” a Treasury spokeswoman said on Friday.
The reduction of double-A-plus will drive global financial markets in uncharted territory after a volatile week driven by concerns about a worsening debt crisis in Europe and a weak economy in the United States.
The triple-A rating has made the U.S. Treasury bonds one of the world’s safest investment – and has helped the nation to borrow extraordinarily cheap rates to fund their government operations, including two wars and an expensive network of social security for retirees.
Treasury bonds have also been an island of stability amid the economic crisis of recent years. The country has a rating of AAA for 70 years.
Analysts say that, over time, the reduction could increase borrowing costs for the U.S. government, costing tens of billions of taxpayer dollars a year. That could also increase interest rates for consumers and businesses seeking mortgages, credit cards and commercial loans.
The reduction may also have a cascading effect on states and localities. These governments could lose their triple A credit ratings and possibly raising the cost of borrowing for schools, roads and parks.
But the exact impact of the rebate will not be known until at least Sunday evening when Asian markets open, and may not be fully understood for months. Analysts said the initial impact in the markets may be modest, as they have been anticipating a cut S & P for weeks.
And even without a triple-A rating from S & P, the U.S. debt is seen as one of the world’s safest investments. Investors clearly were not scared away from this week. While stocks plummeted, investors were buying Treasuries and increasing their prices.
The rating action immediately fed partisan discussion Friday night. Allies of President Obama said he stressed his call for a “grand bargain” to cut and 4 trillion federal budget that includes a combination of tax revenue and spending cuts.
Republicans criticized Obama’s handling of the economy. “Standard & Poor’s downgrade is a worrying indicator of deterioration of our country under President Obama,” said Republican presidential candidate Mitt Romney.
S & P has angered government officials with aggressive warnings in recent months of a potential downgrade. These warnings so far have not taken public debt markets.
Moreover, two other major credit rating companies, Moody’s Investors Service and Fitch Ratings, have said that preserving the nation’s triple-A rating for now.
S & P downgrade was both a critical financial policy as a conclusion. It is based on a view that American political leaders could not reach at least $ 4 billion and savings, which is needed to reduce the nation’s debt to a manageable level in the next decade.
The debt deal approved by Congress this week proposed spending cuts in two phases. Democrats and Republicans agreed the first round, worth nearly 1 trillion y. However, a congressional commission to decide the rest and 1.2 billion dollars and 1.5 billion, and P & S asked if it would ever happen.
Indictment of paralysis
S & P said it expects higher revenues from the Bush tax cuts will continue, despite Obama vows to end disruption of next year.
“Most Republicans in Congress continue to resist any measures that would increase revenues,” the company said.
S & P cuts served as an indictment of the paralysis which has sent the nation to the brink of defaulting on their debt obligations. It also draws attention, in part because it reflects the tremendous power of a small group of financialanlysts employed by a company in New York, part of McGraw-Hill. In Europe, political leaders have pointed to the credit rating agencies cut the ratings when governments struggling with debt.
The company said the U.S. position “financial diverged from that of other triple-A countries, including Canada, France, Germany and Britain.
Countries with a rating of double A + including New Zealand and Belgium. Among the countries rated double-A, one notch lower, are Bermuda, Spain and Qatar.
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