Just thinking out loud … When S&P downgraded the US in August 2011 one of the important factors they cited was political turmoil:
- the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011
- The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
With the current Fiscal Cliff tussle being played out, and with more to come in the next 2 months (debt ceiling debate), will S&P downgrade the US credit rating again?
