Fitch downgraded the U.S sovereign rating. The markets took the decision largely on their stride — but that doesn’t make the decision inconsequential.
Samuel Corum/AFP via Getty Images
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Samuel Corum/AFP via Getty Images
Fitch downgraded the U.S sovereign rating. The markets took the decision largely on their stride — but that doesn’t make the decision inconsequential.
Samuel Corum/AFP via Getty Images
In the financial world, it’s akin to the gold standard: AAA, three letters meant to denote the safest possible investment.
The U.S. had proudly held to that top-notch debt rating for decades, reflecting its status as the world’s biggest — and safest — economy, one that has never defaulted on its debt obligations.
But on Tuesday, Fitch Ratings cut the U.S. debt by one notch, from AAA to AA+, partly in response to how the federal government handled the debt crisis two months ago. That move mirrored a similar downgrade by S&P in 2011, also following a debt ceiling standoff in Congress.
Fitch cited alarm over the country’s deteriorating finances and expressed major doubts about the government’s ability to tackle the growing debt burden because of the sharp political divisions, exemplified by the brinkmanship over the debt ceiling that brought the government close to a disastrous default.
Treasury Secretary Janet Yellen issued a blistering rebuke of Fitch’s decision, The Dow Jones…