Post by Chahta on Aug 3, 2023 12:26:29 GMT
I forgot how prompt S&P was when they downgraded but Fitch downgrading 2 months after the last event, which everybody new ahead of time and everybody saw the sausage making, is irresponsible. They need to explain why they could not announce this downgrade the first week of June if they were to be credible.
"In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” the ratings agency said.
"Fitch also highlighted the rising general government deficit, which it anticipates will rise to 6.3% of gross domestic product in 2023, from 3.7% in 2022. “Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook,” Fitch said."
Obviously, this is not just about the debt ceiling squabbling. The soaring deficit combined with statist ideology is making the US resemble France.
Opinion seems divided and partisan. From the UK "Telegraph" ...
Larry Summers said that "Fitch’s decision was 'bizarre and inept' given the US economy 'looks stronger than expected'."
"Steven Ricchiuto, US chief economist at Mizuho Securities, said the downgrade 'basically tells you the US government’s spending is a problem'. He added: 'It’s an unsustainable budget situation because the economy can’t even grow its way out of this problem going forward.'"
"Janet Yellen, the US Treasury Secretary, said she strongly disagreed with Fitch, calling the rating change 'arbitrary and based on outdated data'."