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S & P's president is forced to "step down" after lowering US rating because U.S Treasure secretary believes he made the wrong decision .

(4 Posts)
sakura Sun 28-Aug-11 10:23:36

I'm not being funny but he would say that wouldn't he ? hmm

Standard & Poor's president Deven Sharma is to leave the credit rating firm at the end of the year.

The decision follows the credit rating agency's decision to downgrade US debt. S&P also faces an inquiry by the justice department into its ratings of subprime mortgage securities.

Company sources said Sharma's decision predated S&P's historic downgrade of US debt earlier this month. The cut presaged a worldwide rout on the stock markets as it threatened to increase the US's cost of borrowing and caused outrage in Washington. The treasury secretary Tim Geithner said the agency's decision showed "stunning lack of knowledge about basic US fiscal budget math", and they had "reached absolutely the wrong conclusion".

What do you make of this?

Triggles Sun 28-Aug-11 16:45:10

I can't say I have anywhere near enough knowledge on the subject, but am I right in reading that they were upset because he basically said they weren't as good a credit risk anymore, so they threw a wobbly?

niceguy2 Tue 30-Aug-11 16:03:03

I've just seen this. I think part of the reasons quoted for the downgrade wasn't just the maths but also the seeming lack of political consensus to deal effectively with the situation.

I'm no expert but from everything I've read it seems that the US debt is large but nowhere near the scale of UK/Greece debts (in proportion to their GDP). The problem is that the recently the tea party held the rest of the nation to ransom and there are grave doubts that the US can change enough to actually pay off anything.

BadgersPaws Tue 30-Aug-11 16:56:58

"I'm no expert but from everything I've read it seems that the US debt is large but nowhere near the scale of UK/Greece debts (in proportion to their GDP)."

The actual scale of the debt isn't the biggest problem, if you've got debts but you can manage your spending and pay the interest then things aren't so bad.

The US is unable to fund it's usual spending without having to borrow money, and right now for every $1 it spends it's borrowing $0.40, which is really quite worrying and unsustainable.

In the UK our Government was having to borrow about £0.25 for ever £1 that it spend, so the US is building up the debt far quicker than we are and the level of spending to which it has become accustomed is even further from being supportable on their level of taxation than ours is.

And that's a big problem for those who look ahead. As I've said before you cannot live by continually paying your usual week in week out bills on a credit card.

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