U.S. AAA Credit Rating in Jeopardy

Bloomberg - Standard & Poor’s put a “negative” outlook on the long-term AAA credit rating of the U.S., citing a “material risk” the nation’s leaders will fail to deal with rising budget deficits and debt. “We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” New York-based S&P said today in a report. “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

The cost to protect against a default by the government and the nation’s banks jumped and stocks declined after the New York-based firm’s statement, which assigns a one-in-three chance that it will lower the U.S. rating in the next two years. The Standard & Poor's 500 Index tumbled 1.6 percent to 1,298.67 at 12:34 p.m. in New York. The move puts politicians on notice that the U.S. debt rating is at risk unless they reach an agreement to narrow budget deficits and reduce the national debt, which S&P forecasts will rise to 84 percent of gross domestic product by 2013. President Barack Obama and congressional Republicans have clashed repeatedly over when and how to lower the debt, as well as how to fund more immediate government needs. Read full story here: News New Mexico

U.S. AAA Credit Rating in Jeopardy