Monday, August 8, 2011


Dow Jones Industrial Average, Nasdaq down 3 percent, following Standard and Poor downgrade. S&P defends its downgrade of the U.S. creditworthiness to AA+
Standard & Poor defends its decision to downgrade the U.S. creditworthiness to AA+ from the top ranking of AAA. Amid large criticism against the decision from Washington, S&P’s official David Beers has come up with a claim that the agency has an excellent track record in credit rating.
Mr. Beers reiterated that S&P’s ranking is made based on the performance of the economies. The U.S. economy has been starving with huge financial deficit, and it has certainly necessitated the agency to make such a decision, Mr. Beers said.
Turning down America’s criticism that S&P overstated its debt crisis, Beers added that the agency had a robust track record in rating creditworthiness. The credit agency makes rating analyzing all aspects and measures, he added.
“Well, that's completely untrue. And as a matter of fact, the group that rate, the one that rates government ratings has an excellent track record in terms of what ratings are designed to do, which is to provide a meaningful indicator of credit risk,” Beers said.
Meanwhile, in the U.S., financial observers have blamed political parties for the situation. Democrats, Republicans and Tea Party should have stood together to offset the financial deficit of the country, analysts suggest. If so, S&P would not have come up with such a rating that would further deepen the country’s credit crisis.
The Republican and Tea Party’s approach of criticizing Democrats and Obama administration for all its activities has been largely criticized. It is high time the political parties in the U.S. should stand together to face the straggling economy.
Many analysts fear that downgrade in the creditworthiness will naturally increase borrowing costs, ultimately resulting in more poor performance of the economy.