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2 trillion error in S&P calculations: US

Posted: 05 Aug 2011 06:40 PM PDT

2 trillion error in S&P calculations: US

WASHINGTON: The US Treasury Friday hit back against a Standard and Poor's downgrade of its AAA credit rating, saying there was a 2 trillion dollar error in the agency's calculations.

"A judgment flawed by a 2 trillion dollar error speaks for itself," a Treasury spokesman said, just after the US lost its AAA rating for the first time ever and was downgraded to a AA+.

It was the first time the US was downgraded since it first received a triple-AAA rating from Moody's in 1917; it has held the S&P rating since 1941.

Moody's and a third ratings agency, Fitch, say they continue to study the deficit plan to see if the US merits being kept in their ranks of AAA countries.

Earlier, an official close to the discussions with S&P said: "There are deep and fundamental flaws with the S&P analysis." -- AFP

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Full text of S&P statement on US downgrade

Posted: 05 Aug 2011 06:37 PM PDT

Full text of S&P statement on US downgrade

WASHINGTON: The United States was dealt a severe blow Friday when it lost its coveted triple-A credit rating as Standard and Poor's downgraded the nation's debt standing.

Here is the full text of the S&P statement:

"We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

"We have also removed both the short- and long-term ratings from CreditWatch negative.

"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.

"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

"Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

"The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case." -- AFP

Jumaat, 5 Ogos 2011