United States Lose Top Rating. The United States have lost their top credit rating for the first time in a leading credit rating agency. That angered the Chinese governance. More turmoil threatening the world economy.
The rating agency has downgraded standard & poor’s the US credit rating of the top rating of “AAA” to “AA +”. At the same time, the Agency warned of the long-term Outlook is negative. Thus, a further downgrade over the next 12 to 18 months threatens the United States.
As a consequence of experts do not exclude further turbulence in financial markets. Already in the past few days there had been significant losses in the United States, as well as in Europe. Also higher interest rates as a result of downgrading are possible.
The savings targets agreed in raising the debt limit between the Government and Congress were not sufficient, was announced by S & P to the ground. The two other major rating agencies Moody’s and Fitch had following the agreement reached between Democrats and Republicans on Tuesday for the time being the top rating of AAA maintained.
The Government criticized the S & P decision. Your is based on a calculation error, a spokesman for the Finance Ministry said. An assessment that is associated with an error of $2 trillion, speak for themselves. In government circles it was said that the Agency have while deleted the number of its analysis, the error let but doubt their credibility.
China has the United States to the downgrading of its credit rating by the rating agency standard & poor’s criticized and called for extensive cost-cutting measures. In a commentary published Saturday by the official Xinhua News Agency that the American “debt dependency” threatens the world economy. Washington had cut “Gigantic military expenditures and the bloated cost of social assistance“. Beijing currently holds $1.2 trillion in US debt, more than any other country.
The United States this should fail “within their means to live”, would follow more “devastating downgrades of rating” and global financial turmoil, it was said at Xinhua further. “Biggest creditor of the sole superpower in the world”, China has the right to demand that regard their structural debt problems of the US Government.
S & P had announced already in mid-July to review the US credit bill and subject to a downgrading of the outcome of debt dispute. The Agency urged at the time a deficit of four billion dollars. The compromise after a weeks battle in Congress on Tuesday sealed provides only savings of just more than two trillion dollars.
“The downgrade our opinion reflects that the plan to fiscal consolidation, the Congress and the Government recently agreed, is not enough to stabilize the medium-term dynamics at the national debt“, said S & P. It is also doubtful that Democrats and Republicans can agree on additional savings.
Not completely unexpected
Lowered credit rating, credit for the Government, but also for businesses and consumers in the United States will be more expensive. Experts expect that state borrowing costs to $100 billion over time could costs. The Fed said, impact on the economic support of the Federal Reserve as the emergency credit program and the program for the purchase of bonds not there. Also, there are no changes for the banks in dealing with US bonds.
For the financial markets, the downgrade may come hardly at a worse time. The fear of a renewed recession in the United States and an expansion of the European debt crisis had led this week to worldwide panic selling on the stock exchanges. The S & P decision come but not completely unexpected, said analyst Vassili Serebriakov of Wells Fargo. “You should partially be priced in the dollar rate.” “We expect continued pressure on the dollar, but a big sell-off is unlikely to believe.” That is probably but keep in mind that there are few alternatives to US Government bonds.
The shareholder protection Ulrich stool keeps the downgrading of US rating for an overdue step. The market “has expected however long ago that” the Chief Executive said the German Community protection for Securities owned (DSW). According to one of the costliest weeks in the history of the DAX stool said investments would always risky, because the faster moving trend. Despite the increasing insecurity, selected German shares are still a good investment. Beginners have now cheap purchase options.
Due to the importance of the US dollar as reserve currency, the devaluation could further bring the world economy, already suffering the euro crisis, into a tailspin. Nevertheless, French Economics Minister François Baroin makes no worries about the US economy. “France has a full confidence in the stability of the American economy,” he said on Saturday. Baroin praised the Government for its decisive action”” to get the debt under control. One should not overestimate the downgrade of the US credit rating.
Economics Minister Philipp Rösler (FDP) would not comment. “I will not comment ratings of individual agencies“, he said the “image on Sunday” according to the report.
Other countries tried to calm. A particular not called Japanese officials told news agency Dow Jones, Tokyo have confidence in US Government bonds, which would lose by downgrading to appeal further. A crisis meeting in the Ministry of Finance took place in South Korea. Vice Finance Minister Yim Jong Yong said even if short-term effects are possible, his country should be not “extremely concerned”. Comment the Finance Ministry wanted to not on first the downgrading.