The credit rating agency, Standard and Poor’s downgraded America’s sterling triple-A credit rating to AA+ for the very first time in America’s history (since 1917) because our government is spending too much money. This credit rating agency wanted deeper cuts than Congress and the President agreed on last week. Standard & Poors threaten more downgrades if the debt is not soon reigned in.
The U.S.’s new double A+ rating “could go down more in a time frame of six months to 24 months,” to double-A, depending on government action to cut the deficit, John Chambers, managing director and chairman of Standard & Poor’s sovereign ratings committee tells FOX Business senior vice president and anchor Neil Cavuto in an interview on FOX News Saturday.
Here is part of Standard & Poors’ statement: The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
Dow Jones panicked last week to our financial crisis and also the looming European debt crises by falling 689 points, the most since the housing crisis in 2008. Some economists are warning that we are on the road to Greece.
The Wall Street Journal states the reason for this drop: Part of the reason that U.S. stocks fell in early morning trading was a well-circulated but unsubstantiated rumor that Standard & Poor’s was going to downgrade the U.S.’s credit rating. S&P told Dow Jones Newswires it declined to comment on market rumors, and it also declined to give any update on a U.S. review. Rival ratings companies Moody’s and Fitch both affirmed their triple-A ratings on the U.S. after the debt-ceiling compromise was reached earlier in the week.
In Europe, leaders are grappling with a widening debt crisis, which started in Greece and has now spread to Italy and Spain. An earlier bailout of Greece now appears insufficient. There are growing concerns about European banks and their heavy investments in the debt of countries with big fiscal problems.
Not only are Greece and Portugal in danger of default but also the much bigger Italy. Italy owes more than $2 trillion in debt making Italy the third-largest borrower in the world.
“The markets are saying Italy is on the chopping block,” says Thomas Tzitzouris, head of fixed income research at Strategas Partners.
If Italy defaults there will be a domino effect on the global economy. French banks have loaned heavily to Italian banks and U. S. banks have loaned heavily to French banks. A default in an economy as large as Italy’s could throw Europe into a recession that would slam an already struggling American economy. A European default would hurt our exports which is about 20 percent of our economy.
Our U. S. economy is weak as a result of a recessionary level unemployment at 9.1 percent, a growth rate of only 0.8 in the first half of this year, a falling Dow Jones, consumers not spending because of high gas and food prices, and businesses not hiring because of uncertainties about the future.
“In this interconnected world, such a large default would have repercussions on banks and corporations around the world,” says Uri Dadush, director of the international economics program at the Carnegie Endowment for International Peace. “We know it’s going to be big. But we don’t want to find out how big.”
The reason I ask if the downgrade was a bad “sign” is because we know in the Tribulation period the economy will get so bad that the unsaved will choose to receive the mark of the beast in order to sell and buy (Revelation 13:16-17: Also he causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name).
That decision by the unsaved to reject Christ as Savior brought on ,in part, by a poor economy will seal their eternal destiny. Listen to John’s warning in Revelation 14:9-10: And another angel, a third, followed them, saying with a loud voice, “If anyone worships the beast and its image and receives a mark on his forehead or on his hand, he also will drink the wine of God’s wrath, poured full strength into the cup of his anger, and he will be tormented with fire and sulfur in the presence of the holy angels and in the presence of the Lamb.
We know the affluent young ruler rejected Christ’s offer of salvation over money in Luke 18:23. Jesus warned “No man can serve two masters: for either he will hate the one and love the other; or else he will hold to the one, and despise the other. You cannot serve God and money” (Matthew 6:24).