Monday, April 18, 2011

S&P sounds alarm on US debt

Standard Poor’s issued a stark warning to Washington on Monday, cutting its outlook on US sovereign debt for the first time and throwing more fuel on the raging debate over America’s swollen deficits.

The agency kept America’s credit rating at triple A but for the first time since it started rating US debt 70 years ago, cut its outlook from “stable” to “negative”. A negative outlook means there is a one-third chance of a downgrade in the next two years.

Doubts about US creditworthiness could threaten the dollar’s use as a global reserve currency amid the rise of rivals such as China that have better growth prospects and fewer fiscal challenges.

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