Moral Outrage
Whew! God help us!

US risky credit rating further erodes American dollar economy

For every dollar the federal government spends, it takes in less than 60 cents in revenue.

And Standard & Poor’s (S&P) has now threatened to downgrade the United States’ prized AAA credit rating unless the Obama administration and Congress find a way to slash the yawning federal budget deficit within two years.

A downgrade, which would leave Germany and France with a higher rating, would erode the status of the United States as the world’s most powerful economy and the dollar’s role as the dominant global currency.

The threat of a downgrade raises the stakes in the struggle between President Obama’s Democratic administration and his Republican opponents in the House to get control over a nearly $1.4tn budget deficit and $14.27tn debt burden.

Japan’s reserves stand at over $1.12 trillion, the bulk of which is thought to be in Treasuries. But this amount is dwarfed by China’s $3 trillion in reserves, and again much of that is believed to be in US government debt. Other large holders of US debt include the United Kingdom, oil exporting nations in the Middle East, Brazil, Hong Kong, Russia, Taiwan and Canada.


One Response to “US risky credit rating further erodes American dollar economy”

  1. On Tuesday, China’s Foreign Ministry said that the United Statesmust take “responsible” measures to protect investors in its debt after Standard & Poor’s threatened to lower its credit rating on the United States due to a bulging budget deficit.

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