The Standard & Poor’s rating agency announced today that it had downgraded the United States credit rating to AA+ from its top rank of AAA.
“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” the agency said about the move, which was announced after the markets had closed.
Rating agencies – S&P, Moody’s and Fitch – analyze risk and give debt a grade that is supposed to reflect the borrower’s ability to repay its loans.
The safest bets are stamped AAA. That’s where US debt has stood for years. Moody’s first assigned the United States a AAA rating in 1917.
Rumors of a downgrade surfaced shortly after Italian Prime Minister Silvio Berlusconi announced in Rome that finance ministers of the Group of Seven industrialized nations may meet “in a few days” to discuss the sagging world economy.
The G7 members are Britain, Canada, France, Germany, Italy, Japan and the United States.
The announcement came on a day when financial anxiety gripped the globe. Stock markets worldwide saw intense volatility amid worries of a widening debt crisis in Europe and a stalled economic recovery in the United States.
Stock market values fell across Asia and Europe on Friday. US markets were dramatically up and down a day after having their worst day since the 2008 financial crisis. (CNN)