Fitch, S&P Clash on U.S. Rating: Who's Right?

On Tuesday, credit ratings agency Fitch affirmed its "AAA" rating of the U.S. and said its near-term outlook for America's sovereign paper was "stable." The decision is a remarkable contrast to the cut in the U.S. rating by S&P, which downgraded the nation's debt to "AA+" and offered a "negative" near-term view. It would take a crystal ball to say which of the firms is right, but the differences in the reasoning are easy to see.

Fitch said in the explanation of its decision that "The affirmation of the US 'AAA' sovereign rating reflects the fact that the key pillars of U.S.'s exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base. Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks'''. The agency downplayed concerns about political gridlock in Washington, poor efforts to cut the deficit, and the costs of the U.S. debt, which continues to increase.

In contrast, S&P's concerns were center on "political risk" and a "rising debt burden." The agency wrote "More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policy-making 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 credibility of two ratings, or lack thereof, pivots on one issue. Does Washington decide economic policy or does the economy force the hands of politicians? If the debt and deficit problems worsen and Social Security and Medicare are threatened, will voters force Congress and the Administration to act before U.S. financial obligations become unsustainable? Put simply, are American citizens smart enough, and active enough, to press their collective opinion on the people they select to run the federal government?

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yorktown1979

It's a little late now. Most people I know have had their credit card interest rates raised, their credit limits lowered and minimum payment amounts raised. Thanks so much Tea Party/Republicans who did this to us. I won't forget it come election time, after all I'll still be paying for it!!!!!

August 17 2011 at 7:13 PM Report abuse -1 rate up rate down Reply
1 reply to yorktown1979's comment
icemanbill23

You're playing into yet another liberal lie. The downgrade is long overdue and has little to do with the efforts of the Tea Party. The Democrats wanted no spending cuts, remember? S&P (and the Tea Party) wanted over 4 trillion in cuts over the next decade. The 2 trillion in spending cuts were insufficient to maintain our perfect credit rating, so S&P simply executed what they had promised. Expect further downgrades in the near future. America's financial future is entering crisis mode and liberals will be pointing fingers everywhere but in the right direction.

August 18 2011 at 1:24 AM Report abuse +1 rate up rate down Reply
dbwcb2u

Same agency said GM Bonds were rock solid...DUH! NOT!

August 17 2011 at 6:31 PM Report abuse rate up rate down Reply
svfortuna

Interesting, whe S&P generally the most recognized source of sovereign credit ratings lowers the US ratings, the administration, and main stream media downplay it and say it is one of therating agencies that contributed to the sub prime mortgage backed security scandal---- now however, when Fitch, an organization big enough to fit in the back room of a barber shop maintains our AAA rating----- the Huff Post acts like God himself has spoken. What ever happened to journalism?

August 17 2011 at 5:43 PM Report abuse +1 rate up rate down Reply
1 reply to svfortuna's comment
dbwcb2u

Huff post and journalism in the same sentence just don't see that very often ahhhh never!

August 17 2011 at 6:33 PM Report abuse +1 rate up rate down Reply
martinsportraits

This article should be titled ''FITCH GETS NICE PAYOFF''......If you had any doubts about how dumb the American people are , leave them here !.........Kudos to S&P for their brief moment of integrity!

August 17 2011 at 5:21 PM Report abuse +3 rate up rate down Reply
1 reply to martinsportraits's comment
JayP

Your saying your not american??

August 17 2011 at 5:38 PM Report abuse -1 rate up rate down Reply
chev66427

internet is the real killer of our economy and everyone on capital hill is too stupid to realize it..
ITS killing everything and making out generation of children lazy, and tranced. Small business
cannot make any profit because everyone is trying to match the lowedt price even if its at COST,.
15 years ago there was no issue. How else can you explain the entire world economy..
INTERNET!! as wonderful as it is for knowledge, its is destroying the world. America is am EBAY- CRAIGSTLIST
purchase it online type country now.

August 17 2011 at 5:15 PM Report abuse rate up rate down Reply
1 reply to chev66427's comment
RYAN

A bud and I were talking about that today at work....the net exposed people to the real truth and even total lies about what our government and other governments do with our money and their power.As you said,15 years ago and I said mid 90s today the government could hide more.Keep the people ignorant of every move you make and they will follow you and do what you say like lost puppies.We cant go back now,there is no undoing what is done but Im happy we have the info now,Im happy to know how much our "dear leaders" hate us.

August 17 2011 at 6:46 PM Report abuse +1 rate up rate down Reply
MILES

FITCH, I SMELL DENIAL!

August 17 2011 at 5:13 PM Report abuse +1 rate up rate down Reply
martinsportraits

America is stable according to Fitch .........................LMFAOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

August 17 2011 at 5:02 PM Report abuse +2 rate up rate down Reply
martinsportraits

LOOKS LIKE FITCH IS GETTING GREASED ..........................THIS COUNTRY SHOULDN'T EVEN HAVE THE'' AA ''RATING AND EVERYONE KNOWS IT .........AMERICA IS ON THE SKIDS.....PERIOD , END OF STORY!

August 17 2011 at 5:00 PM Report abuse +3 rate up rate down Reply
1 reply to martinsportraits's comment
JayP

Please leave before the crash..

August 17 2011 at 5:37 PM Report abuse rate up rate down Reply
AMZC

EVERYONE and I mean EVERYONE... federal/state/local governments, politicians, inter/national media, multi-national corporations, economists, scholars, educators, unions, and yes, the public, are all missing the over-arching, salient point in this years-long debate on the alarming collapse of the world's economies and socio-economic policy! Namely, CAPITALISM only 'works' for the top 1% of the world's population and absolutely no one else! It's as much a DEADLY CANCER as any other 'ism', i.e., racism, sexism, nationalism. Other 'isms' such as 'ideals' for governing like communism and socialism become intransigent when applied in practical terms. The plain truth is we desperately need a BOLD NEW ECONOMIC PARADIGM and I fear there aren't any TRUE LEADERS bold or intelligent enough to come right out and state the obvious. Let's air the plain truth and stop jerking people around. The masses are WAY MORE INTELLIGENT, WISE, and CREATIVE than any of the above deign to credit. The problem is the average person (employed or not) is TOTALLY OVERWHELMED with the business of survival rendering reflection and/or devoting time to creative problem-solving nearly impossible.

One more thing--do away totally with political parties, PACS, political associations, and monies necessary to elect government representatives. Watch all the rancor, intransigence, and political grandstanding disappear, I guarantee it! The U.S.'s two-party system has never, nor will it ever, work! Republicans and Democrats are two sides of the same coin--nothing more, nothing less. They're all a COLOSSAL waste of time, energy, and money!

I went on for so long don't have any more time/space to share ideas/possible solutions. Suffice it to say barter (exchange of goods and services not based on currency) and a viable, more equitable manner of exchange between countries sans protectionism, ridiculous subsidies, IMF and World Bank impositions on struggling nations, and more open borders would go a LOOONG WAY toward improving the worlds' international economic state for all equally. I'm giving myself homework--gotta read some anarchists' writings such as (Servant of God) Dorothy Day, and those with a more moral, ethical, faith-based perspective.

August 17 2011 at 4:45 PM Report abuse -3 rate up rate down Reply
invmartyc

The GOP will not have any of this! They worked too hard pushing this economy into the crapper to have some liberal commie credit rating company ruin it for them.

August 17 2011 at 4:37 PM Report abuse -5 rate up rate down Reply
1 reply to invmartyc's comment
mrspelosi

You appear to be incoherent dear. Sorry to see you are so confused and not able to make any sense. Is there anyone I can call to help you?

August 17 2011 at 6:47 PM Report abuse +1 rate up rate down Reply