U.S. Braces for Possible S&P Downgrade

August 5, 2011

Editor's Note: As stocks see their worst week in almost two years, the rating agency Standard & Poor's may be getting ready to downgrade the credit rating of the United States government. This is no surprise to us. In fact, two days ago, the U.S. public debt shot up over 100% of GDP, according to a news story from AFP. This puts the U.S. in the same category as nations like Japan, Greece, Italy and Ireland, to name a few. Also, Moody's announced that the U.S. needed to lower the debt-to-GDP ratio to 73% by 2015 in order to ensure the sustainability of the AAA credit status.  

(CNBC.com) – U.S. government officials are bracing for the rating agency Standard & Poor’s to downgrade the country’s credit as early as this evening or take other possible action, according to someone familiar with the matter.

Throughout Friday, markets were rife with speculation that S&P, which has had a negative outlook on the U.S. since April 18, would downgrade the country’s credit from its current triple-A level.

On July 14, S&P put the government on a credit watch with negative implications, meaning there was at least a one in two chance the U.S.’s long-term debt would be downgraded within 90 days.

An S&P spokesman declined to comment on any possible plans for a downgrade or statement later Friday.

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