Rather than rallying up from news of the debt ceiling deal, the markets have continued to fall, as reports find the debt deal as insufficient to relieve the US from potential downgrade by Standard and Poor’s Credit Rating Agency, and future dilemmas concerning tax revenues and entitlement.
Continuing its fall, S&P 500’s decrease has landed it in the negative for its yearly outlook. The broad base index fell for a seventh day and crashed through its 200-day moving average, thus creating ominous signs for the future of the markets. The seven days of losses marks the longest continuous loss since October 2008. Although both Moody and Fitch have withdrawn their overshadowing threats of immediate downgrade, both agencies continue applying pressure for future reforms in the US fiscal system. Moody has stated that future downgrade is possible if Congress is not able to resolve issues in 2013. With Congress’ inability to resolve outstanding issues until hours before a default of a global power, the outlook for future mediation and collaboration for the benefit of the nation does not seem too promising. If Congress was able to learn from its mistakes, as it should have before the debt crisis, then maybe there exists potential for a rallying cry to emerge from Congress and around the US, to help bring the nation back on its feet.
“Both parties share power in Washington and both parties need to take responsibility for improving this economy. It’s not a Democratic responsibility or a Republican responsibility. It is our collective responsibility as Americans.” – President Barack Obama.
With Standard and Poor refusing to comment on the debt deal, as well as the US fiscal situation in general, the need for further reforms is evident. As President Obama has oft-repeated, the debt deal will serve as a stepping stone for further spending cuts as well as taxes, an apparent forbidden word for Republicans. Although the first step may be modest, America can hope that its will serve as momentum for continued bipartisan negotiations and constructive collaboration. With the markets continuing to fall, Obama’s statement that “its pretty likely that the uncertainty surrounding the raising of the debt ceiling – for both businesses and consumers – has been unsettling”, has a loud ring of truth. Dow Jones fell over 260 points yesterday, and fears are only growing as rumors go around about another recession. This is underscored by the downgrade of the US by a Chinese Rating Agency, the Dagong Global Credit Rating Company, which had downgraded the US back in November from AAA to A+ and has now downgraded the US to A.
The safety of the American nation is threatened by the foundation of the world, the financial system, which is interconnected throughout the world. To read more about Global Integration, read my blog: Global Integration