Expert Zone

Straight from the Specialists

Impact of U.S. debt downgrade

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Standard & Poor’s has cut the U.S. triple-A rating down to AA+ which if one is to go by the technical meaning, says the U.S. is no longer as reliable as it was last week when it comes to repaying its debts.

U.S. debt is now hovering around 100 pct of its GDP ($14-15 trillion).

However, what’s more worrying is the manner in which U.S. politicians driven by short-sighted electoral objectives pushed the country to its reputational edge, making them look very similar to some of the much maligned emerging market leadership which lacks political will to take hard and nonpartisan decisions.

The game was not very different with the Republicans sheltering the rich with lower taxes and wanting to prevent the Democrats playing to their gallery by spending on welfare.

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