The downgrade of the United States long-term debt to AA+ from AAA has global implications, said Alessandro Giansanti, a credit market strategist at ING in Amsterdam.
“We can see that this may force the U.S. to move more aggressively to cut spending,” he said, something that could drive the already weak economy into recession and weigh on the economies of all of its trading partners. “That’s the main driver” of the stock market declines, he said.
This is a wealth destruction tax imposed by the federal government to finance its incompetence.
Yes. Because the government refuses to raise revenue to pay for its obligation, there is little confidence that they can actually honor its debts. We cut spending, we further decrease revenue, thus meaning further ability to finance the institutions that protect a free society.