Ratings firm Standard & Poor’s cut its outlook on U.S. government debt to “negative” from “stable” for the first time in history, citing ongoing concerns over the long-term fiscal health of the country.
S&P analysts hosted a call explaining their decision to keep the U.S. at a AAA rating, but move the outlook to “negative.” MarketBeat live-blogged the call. Here is the recap.
S&P is unsure that the “gulf of differences” between Republicans and Democrats over how to reduce the country’s fiscal deficit can be overcome to provide meaningful long-term change, said David Beers, S&P’s global head of sovereign debt ratings. S&P did affirm the country’s top-notch triple-A rating.
“The underlying trajectory of the debt burden is still rising,” he said. Other triple-A-rated countries that have faced similar problems, such as the U.K., have implemented new measures to handle debt problems, leaving the U.S. behind in the fight against rising debt, he said.
The ratings company believes the chances that the U.S.’s credit rating will be lowered within two years are around one-in-three.
I better not hear ANYONE use the word “unexpected” about this.
If anything, I’m surprised it’s taken this long to do it.
It’s pretty clear that the political class lacks the will to do anything to get our finances in order. At this point there is no way this can end in any way other than badly. The question now is how bad, 30’s depression bad or Kevin Baker’s colander and banana hammock predictions?