S&P Downgrade of USA to AA+
Remember when Rumsfeld was denigrating Old Europe (France, Germany, Scandanavia, UK) all of which have AAA ratings.
“What’s changed is the political gridlock,” said David Beers, S.& P.’s global head of sovereign ratings, in an e-mail several days before a debt ceiling agreement was announced. “Even now, it’s an open question as to whether or when Congress and the administration can agree on fiscal measures that will stabilize the upward trajectory of the
Experts say the fallout could be modest.
The federal government makes about $250 billion in interest payments a year, so even a small increase in the rates demanded by investors in
In addition, S.& P. may now move to downgrade other entities backed by the government, including Fannie Mae and Freddie Mac, the government-controlled mortgage companies, raising rates on home mortgage loans for borrowers.