Was the Standard & Poor’s warning about the reliability of U.S. debt just the medicine American lawmakers needed. According to this editorial from Germany’s Financial Times Deutschland, S&P’s warning was just what the money doctor ordered.
The Financial Times Deutschland editorial says in part:
“The signal is a dramatic one: Standard & Poor’s is the first major credit rating agency to threaten to downgrade America’s credit. It’s not the first warning shot – the precarious financial situation on recent weeks had already spurred the International Monetary Fund as well as large investors like the investment management firm PIMCO to sound the alarm. But this warning has shaken markets the most. And that’s good.
At least the warning builds outside pressure that U.S. lawmakers urgently need. The administration and Congress are increasingly irreconcilable – a bad sign for the upcoming budget negotiations. And this when it’s high time to agree on a moderate mix of tax increases and spending cuts. Not only to lower the budget deficit, but in particular to reassure increasingly nervous investors.
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