More financial woes in stock markets and federal debt
U.S. stocks plunged, European markets closed sharply down, and Asia exchanges lost ground across the board Monday, as investors responded to the unprecedented downgrade of U.S. debt on Friday, and concerns around the ongoing eurozone crisis.
John Chambers, managing director of Standard & Poor’s, says of S&P’s decision to lower the nation’s credit rating for the first time in U.S. history, “There really is, well, as President Obama — who characterized the political system as ‘dysfunctional’ — I think that’s a good word. We got to a position where we were within ten hours of having a major cash flow problem. This is not what happens in other countries.”
He said the U.S. needs to find a way of “forging consensus, so that we can make the tough choices that lie ahead, because the fiscal situation in the United States is not sustainable.”
Meanwhile, the Congressional Budget Office said that President Barack Obama’s 2012 budget would cause large and persistent yearly deficits, pushing the public debt to $20.8 trillion by 2021.
“Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021,” the CBO said in its March 18 analysis of Obama’s 2012 budget.
Debt was 40 percent of GDP at the end of 2008, just before Obama took office.