US unhappy over downgrading of economy by S&P
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US unhappy over downgrading of economy by S&P

Last Updated: Saturday, August 06, 2011, 13:36
 
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US unhappy over downgrading of economy by S&P

Washington: Taken aback by news that Standard and Poor's has downgraded US's credit rating from "AAA" to "AA+" for the first time in country's history, Obama Administration on Friday appeared to be questioning the analysis of the rating agency.

"This is a facts-be-damned decision. Their analysis was way off, but they wouldn't budge," an unnamed White House official was quoted as saying by the CNN.

The US President Barack Obama met the Treasury Secretary Timothy Geithner before he left for Camp David Friday afternoon.

Officials of the Department of Treasury said the decision of S&P, an eminent credit agency, to downgrade US's rating is flawed.

"A judgement flawed by a USD 2 trillion error speaks for itself," a Treasury official said referring to the USD 2 trillion error in the S&P figures which was pointed out by the Treasury earlier in the day, which was later fixed by the credit rating agency.

It is understood that S&P delayed its announcement on US credit rating for several hours on Friday after the flaw in its figures was pointed out by the Treasury officials.

"Around 1:30 pm, S&P officials notified the Treasury Department that they planned to downgrade US debt and presented the government with their findings," The Wall Street Journal said.

"The initial mistake was crucial, said a source familiar with the matter, because it underpinned claims by S&P that the US needed to achieve USD 4 trillion in deficit savings to avoid a downgrade. If the proper baseline were used, the government with its USD 2.1 trillion in cuts met the S&P standard," the Politico reported.

"The government fought the downgrade," said the Fox News.

"Administration sources familiar with the discussions said the S&P analysis was fundamentally flawed," it added.

However, S&P defended its decision to downgrade America's credit rating.

Responding to the criticism from the White House and the Department of Treasury, the S&P said in a statement that the ratings decision to lower the long-term rating to AA+ from AAA was not affected by the change of assumptions regarding the pace of discretionary spending growth.

Stating that its ratings are determined primarily using a 3-5 year time horizon, S&P said in the near term horizon, by 2015, the US net general
government.However, S&P defended its decision to downgrade America's credit rating.

Responding to the criticism from the White House and the Department of Treasury, the S&P said in a statement that the ratings decision to lower the long-term rating to AA+ from AAA was not affected by the change of assumptions regarding the pace of discretionary spending growth.

Bureau Report




First Published: Saturday, August 06, 2011, 13:36


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