Lately, there have been a slate of negative news coming out from United States:
a) Budget impasse in the Congress to reduce the budget deficit
b) S&P turning negative on United States "AAA"credit ratings
c) The continuing decline of the US Dollar
d) The declining global economic influence of the United States of America
I am not an expert in United States economic or political issues. However, what I do know is :
a) Governments around the world are holding trillions of US Treasuries
b) The preferred choice of currency for economic trade is US Dollar
c) Many economies have pegged their own currencies to the US Dollar
The economic and political impacts to the world should the downgrade of US's AAA credit rating occur cannot be ignored and underestimated. The repercussions could be severe and may lead to a global Depression.
I'm not a pessimist by nature. But the warning signs are clear and unless the Congress and the White House make a concerted effort in dealing with the growing budget deficit, US may not be able to recover from another Black Swan event.
regards,
Bernard
