U.S. Stocks Spiral Downwards

Apr 19 2011           Jump To Discussion

NEW YORK – For the first time since Pearl Harbor does the U.S. economy receive a negative rating.

Standard & Poor the agency in charge of rating the U.S. economic health, downgraded the North American continent’s economy from stable to negative.

This is only the second time the U.S. received a negative rating from S&P since the agency was formed in 1941, the same year Pearl Harbor was attacked and also the same year the U.S. got its first negative rating.

But a negative economy rating isn’t the only thing America has to worry about.  S&P is also considering to downgrade the coveted gold-plated AAA rating that the U.S. has enjoyed for the past 70 years within the next two years.

The “blow” to America’s rating stems from fear that the U.S. recovery will take much longer than was originally stipulated because of the country’s inability to tackle its massive debt deficit.

The negative rating did not only send U.S. stocks in a downward spin.  As the news spread of the downgrade in rating, stocks around the world began to nosedive in Japan, South Korea, Hong Kong and Europe.

Benchmarks in China, Singapore, Taiwan, Australia, New Zealand and the Philippines also lost ground.

Standard & Poors decision to put the US’s AAA sovereign debt rating on negative watch took markets by surprise. Yesterday’s knee-jerk reaction was to sell equities and seek the US dollar as a safe haven currency,” said DBS Bank Ltd. in Singapore.

‘The rest of the world needs to come to terms that the US can no longer sustain its role (as) the consumer of last resort for the global economy indefinitely.’

By the end of the fiscal year on September 30 2011, America’s debt is projected at being $15.476 trillion, or 102.6 per cent of its gross domestic product.

Its debt mountain is on course to reach 84 per cent of national income by 2013 –  significantly higher than other developed economies.

Also Read:

- U.S. Employment Lowest In 2 Years

- Bad U.S. Economy Is Bats Fault

 

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