In what appeared to be an effort to undermine S&P’s credibility and counteract any negative effects of the downgrade, White House and Treasury officials accused S&P of making a $2 trillion error and misreading basic data in cutting the rating of the world’s largest economy to AA+ from triple-A.
Other critics have cited S&P’s various upbeat assessments of companies and debt instruments weeks before they failed — including the packaged mortgage securities that sparked the 2008 financial collapse.
S&P officials, however, refused to budge while acknowledging the error.
“It doesn’t really change the facts on the ground,” S&P ratings head John Chambers told CNN.
“The facts on the ground (are) that the deal that we have, the Budget Control Act, is $2 trillion. It’s going to take a deal about twice the size of that to stabilize the debt to GDP (ratio),” he said.
“Our figures that we published are accurate and our analysis is sound.”
Late Friday, S&P followed through with its four-month-old threat to cut the US rating after what appears to have been tense discussions with US officials.
S&P argued that the country’s massive debt and its rising fiscal deficits meant it could not longer be included among the world’s most risk-worthy sovereign borrowers.
Stop the bickering!
The White House on Saturday called for an end to the political bickering cited as a reason for the first-ever US credit rating downgrade, as US allies voiced confidence in the world’s largest economy.
The White House reacted to the downgrade by calling for unity, following the acrimonious months-long partisan battle to secure a deal on raising the US debt ceiling and slashing the deficit, which rattled world markets.
Is this the wake-up call the US needed to get it together?!!!