S&P hints US facing another downgrade
Source: Agencies |
August 8, 2011, Monday
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Print Edition
Print Edition
THERE'S a 1 in 3 chance that the United States' credit rating could be downgraded a further notch if conditions erode over the next six to 24 months, a Standard & Poor's official said.
The credit rating agency's Managing Director John Chambers told ABC's "This Week" that if the fiscal position of the US deteriorates further, or if political gridlock tightens even more, a further downgrade is possible.
Chambers also said that it would take "stabilization and eventual decline" of the federal debt as a share of the economy as well as more consensus in Washington for the US to win back a top rating.
S&P downgraded the US rating las Friday, from AAA to AA+, for the first time.
Former Federal Reserve Chairman Alan Greenspan said he expects the stock market slide to continue in the wake of the S&P decision.
Appearing on NBC's "Meet the Press" yesterday, Greenspan said markets will take time to bottom out and that he expects a negative reaction today to the S&P action.
Damaging
But Greenspan also said he doesn't see any risk in investing in the US, adding that the S&P's downgrade won't change that.
He said the downgrade "hit a nerve" and was damaging to the psyche of the country. But he couldn't foresee a scenario in which the US would default on its debts.
Global policymakers held an emergency conference call yesterday to discuss the twin debt crises in the US and Europe that are causing market turmoil and stoking fears of the rich world sliding back into recession.
After a week that saw US$2.5 trillion wiped off global stock markets, political leaders are under mounting pressure to reassure investors that Western governments have both the will and the ability to reduce their huge and growing public debt loads.
South Korea said finance deputies from the Group of 20 major economies discussed the European debt crisis and US sovereign rating downgrade yesterday.
Conference call
A Japanese government source said finance leaders from the Group of Seven big developed economies would also discuss the crisis today and may issue a statement afterwards.
The European Central Bank was due to hold a rare Sunday afternoon conference call.
Washington's Asian allies rallied round the battered superpower, with Japan and South Korea both saying their trust in US Treasuries remained unshaken.
However, China, the largest foreign holder of US debt, took the economic superpower to task for allowing its fiscal house to get into such disarray.
"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary that scorned America for its "debt addiction."
The credit rating agency's Managing Director John Chambers told ABC's "This Week" that if the fiscal position of the US deteriorates further, or if political gridlock tightens even more, a further downgrade is possible.
Chambers also said that it would take "stabilization and eventual decline" of the federal debt as a share of the economy as well as more consensus in Washington for the US to win back a top rating.
S&P downgraded the US rating las Friday, from AAA to AA+, for the first time.
Former Federal Reserve Chairman Alan Greenspan said he expects the stock market slide to continue in the wake of the S&P decision.
Appearing on NBC's "Meet the Press" yesterday, Greenspan said markets will take time to bottom out and that he expects a negative reaction today to the S&P action.
Damaging
But Greenspan also said he doesn't see any risk in investing in the US, adding that the S&P's downgrade won't change that.
He said the downgrade "hit a nerve" and was damaging to the psyche of the country. But he couldn't foresee a scenario in which the US would default on its debts.
Global policymakers held an emergency conference call yesterday to discuss the twin debt crises in the US and Europe that are causing market turmoil and stoking fears of the rich world sliding back into recession.
After a week that saw US$2.5 trillion wiped off global stock markets, political leaders are under mounting pressure to reassure investors that Western governments have both the will and the ability to reduce their huge and growing public debt loads.
South Korea said finance deputies from the Group of 20 major economies discussed the European debt crisis and US sovereign rating downgrade yesterday.
Conference call
A Japanese government source said finance leaders from the Group of Seven big developed economies would also discuss the crisis today and may issue a statement afterwards.
The European Central Bank was due to hold a rare Sunday afternoon conference call.
Washington's Asian allies rallied round the battered superpower, with Japan and South Korea both saying their trust in US Treasuries remained unshaken.
However, China, the largest foreign holder of US debt, took the economic superpower to task for allowing its fiscal house to get into such disarray.
"The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary that scorned America for its "debt addiction."
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