S&P Warns Of A Second Downgrade -- Politico
One day after lowering the nation’s platinum triple-A credit rating, Standard & Poor’s analysts warned Saturday that the U.S. government could face a second downgrade if the economy continues to struggle and the government fails to make the cuts outlined in the debt ceiling agreement.
The ratings agency on Friday downgraded the nation to AA+ for the first time in history, saying partisanship in Washington is preventing dramatic deficit reduction.
S&P managing director John Chambers told reporters on a Saturday conference call that the toxic mix of a listless economy and political infighting will cause government debt to grow.
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My Comment: The Chinese are justifiably concerned. What is my take .... a huge political/philosophical gulf exists between the White House/Senate versus Congress. One side wants to continue spending and raising taxes, the other side is reluctant to do so because of opposition from 'tea-party' members within its own caucus. The inevitable result will be government/legislative gridlock until next year's election, more deficit spending, and a probably further downgrade before November 2012.
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