The United States’ credit rating was downgraded by Standard & Poor on Friday night to AA+, one notch below the coveted AAA rating maintained by countries such as Australia, Switzerland, Sweden and the UK.
The historic decision was related to political wrangling in Washington over raising the debt ceiling as well as concerns that the United States will not be able to do enough to control its spending over the next few years.
US Republican Presidential candidate, Congressman Ron Paul, who voted against raising the debt ceiling said:
“We were told by proponents of increasing the debt ceiling that a credit downgrade would come if we didn’t raise the limit, but the opposite was true.
“The ratings agencies had been warning us for some time that it is imperative upon the U.S. government to get its fiscal house in order and tackle its debt and deficit problem by taking serious steps.
“Unfortunately, the game in Washington has been one of partisan blaming and bipartisan out-of-control spending.
“America has been dealing with this severe economic crisis for years because the Washington establishment failed to focus on the true issues at hand: a declining dollar and out-of-control spending.”
The unprecedented downgrading marks a watershed in the discussion over sovereign debt. The week preceding the move saw markets around the world lose billions of dollars’ worth of value as investors became skittish over governments’ ability to service their obligations. The S&P decision on Friday night is likely to see further drops in the stock market on Monday.