Jul 29 2011
Standard & Poor’s (S&P) has hinted of a possible downgrade of the US sovereign debt ratings. The warning is on the back of increasing risk of a significant policy stalemate lasting beyond any near-term agreement to raise the debt ceiling, amid rising pressure to reduced deficit spending by the Obama administration. S&P had already lowered its outlook on the US AAA long-term rating to negative in April 2011. The political debate about the US fiscal stance and the related issue of the US government debt ceiling has only become more entangled. The rating agency affirmed that the risk of a default on US debts is high following the continued delay to raise the debt ceiling. A default and consequent downgrade of US debts might likely distort the global payment system, as Dollar remains the international currency reserves.
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