S&P cuts U.S. rating outlook to negative

whiteonion

"Standard & Poor’s cut its ratings outlook on the U.S. to negative from stable while keeping its triple-A rating on the world’s largest economy."

I think this is just a silly charade, if the rating agencies where objective in any way US debt ratings would have been cut a long time ago. The deficit is just growing bigger and bigger as we speak. The unfunded liabilities in various social programs will cause huge problems in the future.

The second questions is how will the US pay interest on it's debt when the interest rates rise which they will do at some point?

I see no reason why the US should maintain it's triple-A rating.

later12

Given the scale of the US deficit, it is obvious that ratings agencies should consider a downgrade, whether they do that formally via a negative outlook as S&P have done, or whether they simply muse about it publicly, as Moody's have done.

Charade or not, doesn't matter, that's politics. In economic terms, the change in position, however it is manifest, makes sense.

chave

later10 wrote: »

Given the scale of the US deficit, it is obvious that ratings agencies should consider a downgrade, whether they do that formally via a negative outlook as S&P have done, or whether they simply muse about it publicly, as Moody's have done.

Charade or not, doesn't matter, that's politics. In economic terms, the change in position, however it is manifest, makes sense.

You're not looking at the full picture making a statement like that. Think about the bonds the US own also. Clearly they make a net gain on every dollar spent over dollar gained also they have never defaulted AFAIK in history.

later12

Can you clarify what you mean in relation to 'the bonds the US owns', I don't quite see how that is relevant to the US being placed on negative outlook; which in itself should not really be seen as a major surprise.