U.S. Debt-Rating Downgrade‎: First Time since 1941

If Moody’s and Fitch had not dared to touch the famous US triple-A debt rating, Standard & Poor’s Ratings Services has struck a blow last night by announcing a downgrade for the long-term sovereign rating of the United States to AA+, the first time since 1941.

The prospect of the long-term rating is also negative, indicating the possibility of a new downward adjustment.

S & P justified its decision by the protracted controversy on raising the U.S. debt ceiling and the debate on fiscal policy. In addition, the fiscal consolidation plan agreed by Congress and the U.S. administration came out less than the amount expected by S & P to stabilize the overall burden of government debt by 2015.

The downgrade by S & P reflects the vision of increasing the U.S. debt burden and the perception of greater political uncertainty. However, other economic criteria scoring broadly unchanged.

Chinese rating agency Dagong had for its part already decided earlier this week by lowering the “A +” to “A” for U.S. sovereign rating, with a view of “negative”.

China remains the largest creditor of Uncle Sam with nearly 1200 billion of treasury bills on hand, Through Xinhua News Agency, China urges the United States to tackle the structural problems of debt and take responsible action to ensure the safety of Chinese assets in dollars.

The Chinese authorities went further: “There is a need for international monitoring on the issue of the dollar. A new reserve currency may also be an option to avoid a disaster caused by a single country.”