“For a warning about America’s fiscal future,” said The Wall Street Journal in an editorial, look at Thursday’s move by Standard & Poor’s to downgrade Britain’s credit outlook, putting its topnotch AAA rating at risk. “Humiliation aside,” a downgrade would hurt Britain by raising public borrowing costs. The U.S. might want to keep this in mind as it follows the U.K. down the path of “out-of-control spending.”
America’s ballooning deficits are already hurting its borrowing capacity, said Mark Gilbert in Bloomberg. But the U.S. isn’t alone: Arguably, no government deserves “a top credit grade in the current financial climate.” Downgrading the U.S. to a “very strong” AA, from its “extremely strong” AAA, seems appropriate, if the rating agencies aren’t “too cowardly” to follow through.
With their credibility in the toilet, “rating agencies don’t matter anymore,” said Felix Salmon in Reuters. Investors buy U.S. Treasurys because they’re liquid and safe, not because S&P rates them AAA. And they’ll stay AAA so long as they have the lowest yields in the dollar-denominated world—if S&P cuts America’s credit rating, it will be a “lagging indicator.”
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Beware of Splenda: The backlash against artificial sugars
- 43 TV shows to watch in 2014
- 10 things you need to know today: October 30, 2014
- The secret advantages of great penmanship
- Stop making fun of philosophy and read some philosophy
- 6 things the happiest families all have in common
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- How to live a long life, according to science
- How the brides of ISIS are attracting Western women
- For Democrats, the right lesson from 2014 is to be more liberal
Subscribe to the Week