topmain

HOTELS IN CHINA AND ASIA

CLICK HERE FOR ONLINE HOTEL RESERVATION

IT IS INTERESTING!

Standard & Poor's lowered of the U.S. credit rating PDF Print E-mail
Saturday, 06 August 2011 07:28

For the first time since 1917 the international rating agency Standard & Poor's downgraded the credit rating of the U.S. with the highest degree of AAA to AA + level, and with a negative outlook.

This reduction in long-term credit rating of the U.S. occurred against the background of concerns about increasing U.S. budget deficit. Before the debate over raising the ceiling on U.S. public debt, the world's leading rating agencies have reported the possibility of reducing the highest credit rating of the United States, which is a rather unusual solution to the global financial system. According to analysts of International rating agency Standard & Poor's, this downgrade is primarily due to concerns about rapidly growing budget deficit and the size of U.S. debt, estimated respectively at 1.65 trillion dollars and 14.3 trillion.

After this unsatisfactory evaluation for the U.S. , the Republican candidate for U.S. president accused in such an unprecedented decline in credit rating of U.S. economic policy the current U.S. president Barack Obama. Former Massachusetts Governor Mitt Romney and former Speaker Newt Gingrich fell sharply criticized by Barack Obama. Speaker of the House of Representatives John Beyner said the decision to Standard & Poor's – is a natural result of the increasing costs of uncontrolled growth of the U.S. budget.

But later, a representative of the U.S. Treasury Department said, that the Standard & Poor's made a mistake in their calculations of almost $ 2 trillion, taking a high-profile decision to decrease the long-term credit rating of the United States.

The representative of the U.S. Fed (Federal Reserve) also made a statement in which he announced, that the decision of Standard & Poor's about lowering the credit rating of the United States will have no impact on the operations of the Federal Reserve System in issued U.S. Federal Reserve loans to all credit institutions and to conduct operations on the open market, as well as outstanding U.S. Treasury bonds and any other bonds, that were issued by the U.S. Government or confirmed its guarantees.

Despite this, after such an unprecedented decision of the International rating agency Standard & Poor's, U.S. Treasury bonds, which for decades until now considered the most reliable tools for investing in the world now find themselves with a rating lower than the government bonds of countries such as Germany, France and the UK.

Note, that the decision of the International rating agency Standard & Poor's followed by numerous and an unprecedented glow of passion for debate in Congress on the issue of reducing the U.S. budget deficit and raise the ceiling on U.S. public debt. Still on August 2, 2011 the U.S. Congress approved a bill, that would allow to increase the limit of U.S. debt in several stages about 2.1 trillion U.S. dollars, the bill was immediately signed by President Barack Obama. Under the bill, the first phase expected to raise U.S. debt ceiling by 900 billion dollars, while reducing the expenditure of the budget to 917 billion U.S. dollars over 10 years. Also, under the supervision of a special commission consisting of representatives of the two main U.S. political parties will be prepared by a new bill to further reduce costs by $ 1.5 trillion.

As we know, this decision was difficult to reach a compromise between the two major political parties of the USA in order to avoid technical default USA. It should be noted, that the budget cuts, which suggests the bill will not affect the existing core programs in the pension system and health care, and will not be increased and tax rates for wealthy Americans. After signing the bill, the administration of the current U.S. president and Obama himself did not expect such a negative assessment from the International rating agency Standard & Poor's.

But the decision of the International rating agency Standard & Poor's was taken under the influence of the generally accepted among the U.S. Republican Party the opinion, that the bill that was signed by President Obama to increase the limit of U.S. public debt in several stages about 2.1 trillion U.S. dollars - does not solve all problems, and these measures are clearly insufficient to stabilize the debt problems of the United States not only in the long term, but in the medium term. Representatives of the International rating agency Standard & Poor's said, that the downgrade of the United States reflects their belief that the stability of political institutions, the U.S. dropped significantly after April 18, 2011, when it was a momentous decision to change the long-term prognosis creditworthiness of the U.S. economy from "stable level "to" negative level. "

Immediately followed by a reaction to the solution of the International rating agency Standard & Poor's from China. One of the Chinese rating agency also downgraded rating of USA, stating as a reason for doubt about the solvency of the U.S. in the long term, this news is being widely discussed in the Chinese Internet.

Note, that the implications of this decision of the International rating agency Standard & Poor's for the world's financial system may be no less than the failed default, but in a longer time perspective. Also, the international rating agency Standard & Poor's could be accused in rocking of the global financial system.


НАЖМИТЕ ЗДЕСЬ ДЛЯ ПРОСМОТРА ВСЕГО СПИСКА НОВОСТЕЙ О НЕОБЫЧНЫХ ЯВЛЕНИЯХ>>>

CLICK HERE TO SEE ALL LIST OF UNUSUAL PHENOMENA NEWS>>>

 

Add comment


 


SHARE ON: