THE DAILY TELEGRAPH: America's ability to tackle its deficit has been given a strong vote of no confidence, after leading rating agency Standard & Poor's said the chances are rising that the country will lose its prized AAA status.S&P downgraded the outlook for the US government's debt to negative from stable on Monday in a clear shot across the bows of Congress and The White House.
In sharp contrast to every other developed economy, the US has increased its budget deficit in the last year in an effort to accelerate the economic recovery here.
While President Barack Obama and the Republicans have in the last month laid out plans to reduce the deficit, S&P warned that a plan needs to be agreed upon within the next two years for the US to retain its status as a top borrower.
"More than two years after the beginning of the recent crisis, US policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Nikola Swann, an analyst at S&P.
The move by S&P sparked an immediate reaction in financial markets, with US government bond prices falling alongside the S&P 500. Gold prices jumped to a new record of $1,496. » | Richard Blackden, US Business Editor | Monday, April 18, 2011
