NEW YORK (Reuters) – Standard & Poor’s threatened Monday 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.
S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, slapped a negative outlook on the country’s top-notch credit rating and said there’s at least a one-in-three chance that it could eventually cut it.
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.
If investors start demanding higher returns for holding riskier U.S. debt, the rise in bond yields would crank up borrowing costs for consumers and businesses. That would threaten to hurt the economy as it recovers from the worst recession since World War II.
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[...] addthis_product = 'wpp-256'; var addthis_config = {"data_track_clickback":true}; One month before Standard & Poor warned of downgrade US treasury debt’s AAA rating, Bill Gross Asks: “Who Will Buy Treasuries When The Fed [...]