Insider (August 2)
“Fitch shocked the markets when it cut the US government’s credit score Tuesday at a time when the economy appears to be in a stable state.” The downgrade from AAA to AA+ has been widely criticized, “from top Biden administration officials to Wall Street,” with “market thinkers” labelling it “bizarre,” “puzzling,” “unwarranted,” “strange” “inept” and “ridiculous.”
Tags: AA+, AAA, Bizarre, Credit score, Criticized, Downgrade, Economy, Fitch, Inept, Markets, Puzzling, Shocked, Stable, Strange, U.S. Government, Unwarranted, Wall Street
The Economist (August 13)
The Economist believes “Substandard & Poor” provides a useful wake up call for the U.S. S&P’s past is “flawed,” especially by the liberally dispensed ratings that led to the sub-prime crisis. Still, “the basic fact is that credit ratings are useful for investors: if the likes of S&P did not exist, the market would invent them.” Previously unthinkable, the threat of default should not be a bargaining chip. “This is not how an AAA-rated country behaves. S&P did America a favour by pointing this out.”
USA Today (August 7)
“The United States’ unquestioned AAA credit rating is gone, for the first time ever.” S&P’s downgrade was not a surprise, instead it “merely confirmed what anyone with their eyes open for the past decade or two already knew: The U.S. has a huge and growing debt problem that it is resolutely unwilling to solve.” USA Today points out one silver lining. The U.S. is not incapable of solving this problem, merely unwilling. Another silver lining is that two major agencies (Moody’s and Fitch) still assign the highest rating to U.S. debt, which continues to be highly sought by investors worldwide.
