Friday, August 5, 2011

US Downgraded From AAA to AA+

No, this isn't just a rumor. Standard & Poor just dropped an economic and political bombshell by reducing our country's credit rating from "AAA" to "AA+." However, Moody's and Fitch have not followed S&P's decision to downgrade since they recently reaffirmed the America's credit rating as AAA
S&P gave their reasoning for downgrading the United State's credit rating. Apparently, they weren't satisfied with Obama and Congress debt ceiling deal and thinks that we can reduce the public debt in the future.
Although it  dropped our rating down by one notch, nobody really knows what the consequences of this downgrade will be. However, this small pebble thrown in the pond by S&P has the possibility of creating some serious economic tidal waves across American and around the world. Or it might create some small ripples. There are arguments for both scenarios.   
The good news is that only one institution has reduced our credit rating. However, that doesn't mean that other agencies won't fallow suit in the future. I think S&P made this reduction in our rating not because we deserve this downgrade, but serves as a warning for Americans that a loss of credit rating will be the least of our concerns if we continue with the massive amount of money we're spending. I also think its also a way to pressure our politicians to make a serious effort in reducing our deficit.
Regardless of what the consequences will be from this downgrade will be, its time to buckle our seat belt because its going to be a bumpy ride in the future.

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