Former Federal Reserve Chairman Alan Greenspan is fearing the worst when U.S. markets react Monday to a downgrade in the nation’s credit rating.
Appearing on NBC’s “Meet the Press” Sunday, Greenspan said that he expects the stock market slide to continue in the wake of the Standard and Poor’s downgrade.
He called the move damaging to the “psyche” of the country, adding he does not see any risk in investing in U.S. treasury bonds.
“This is not an issue of credit rating. The United States can pay any debt it has because we can always print money to do that, so there is zero probability of default. What I think the S&P thing did was to hit a nerve that there is something bad going on,” said Greenspan.
Stocks have tumbled across the Middle East following the historic downgrade.
S&P representatives are defending the agency’s decision, saying the downgrade is based partly on a lack of confidence in Washington’s ability to resolve the country’s budget issues.
The White House claims the decision is flawed and based on a math error.
(Source: NY1)
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3 Responses
The great annointed one barak now has the only downgrade in history on his hands. Can’t blame this on bush, uh must be a math issue on the s&p’s part
American can pay any of it debt since it can print money; huh? Which shows the dollar ain’t worth anything. This is the problem monetarizing the debt. You have debt you print money the money is worth less. The Weimar Republic in the US?
As of Monday morning before opening, the Asian initial crash largely mitigated itself. THe US stock futures show a decline but not as severe as last week. The dollar is up and the interest on Federal bonds is down (meaning the bonds sell for more than before). Perhaps the downgrade is smoke without fire.
Though of course Obama will argue the need to immediately reduce the deficit by raising taxes on the “rich” (earning over $125000 for a married person), as well as increasing “leaf raking” jobs to reduce nominal unemployment.