Tuesday, April 19, 2011

A shot across the bow for the US

This is significant and I want to remember that it happened on this day: Standards and Poor issued a negative outlook for US government debt. They now have a very narrow window of not more than two years to repair this. I can imagine all those contracts out there which would be affected when the US no longer AAA. Would US politicians rise to the occasion or would they do the absolute stupid thing of the Donkey and Elephant claiming that it has vindicated their positions and remain stuck in their trenches. Come on, show us you are not a bunch of cowardly losers.

You know, I think the politicians needed this. I hope so. Wake up their idea. If there is no deal and action, it doesn't matter which stripe you belonged to. Can they turn this into a blessing in disguise. It is up to them.

From the WSJ

Since S&P began assigning outlooks to government debt in 1989, five AAA-rated countries have been assigned negative outlooks, including Britain in 2009. Three were subsequently downgraded, and Britain and one other were returned to a stable outlook. S&P acted after it determined that new British austerity measures to cut spending and raise revenue would reduce the government deficit to 3% of GDP by 2014 from 11.2% in 2009.
If the U.S. reaches a British-style resolution, S&P will restore the U.S. outlook to stable, Mr. Chambers said.

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