Fitch Places United States’ ‘aaa’ On Rating Watch Negative

The United States isn’t a top-tier creditor, in one map

For that we turn to the BlackRock Investment Institute, the research arm of the giant money manager. It has created the “BlackRock Sovereign Risk Index” which aims to combine key aspects of creditworthiness of 48 countries around the world. It factors in plenty of things that have to do with the substance of different countries’ finances, such as their current debt and deficit levels, banking system strength, and exposure to debt denominated in foreign currencies. But it also adds an important layer that it calls “Willingness to Pay.” It measures the effectiveness and efficiency of governments to meet their obligations, and counts for 30 percent of the total index. Perhaps it shouldn’t be surprising after the last couple of weeks of government shutdown and debt ceiling chicanery in Washington, but by BlackRock’s reckoning, the United States is not among the top-tier credit risks by this ranking. Here’s a complete map: You can check the detailed analysis for each country in an interactive graphic here . By BlackRock’s reckoning, the world’s most creditworthy nations–those with both solid finances and solid political systems that ensure bonds will be repaid–are the likes of Norway, Singapore, and Switzerland. The United States, as the map shows, is in the second tier, more similar to South Korea and Austria and Malaysia in its creditworthiness. For anyone who follows the news, it is hard to disagree. Neil Irwin is a Washington Post columnist and the economics editor of Wonkblog. Each weekday morning his Econ Agenda column reports and explains the latest trends in economics, finance, and the policies that shape both.

The United States Government Is Open for Business

One of the questions that have caused a great deal of perplexity for many years is this: why did the United States rush to withdraw from Iraq without leaving a foothold for itself in the form of military bases or otherwise, after it had heavily invested in a costly war – despite the fact that some Arab countries have covered some of its financial cost? One seasoned observer provided this answer: “The Americans discovered at the time the size of their own wealth of oil and gas, and thus decided that they had no need for Iraq’s oil and for its reserves, nor for the claims they had made about the Iraq War having been for the sake of democracy and freedom. They thus rushed out of there after having spent trillions of dollars. Indeed, the strategic equation had changed, and it required rushing to withdraw without anything in return”. The pattern of instant abandonment without warning is not new to American policy. In fact, the United States has historically had a reputation based on abandoning allies once there are no more benefits to be reaped from them. What is new is that what has been discovered under President Barack Obama exceeds many times over what had begun to appear under former President George W. Bush. It should in fact be stressed that the plans for withdrawal from Iraq were drawn up at the end of the Bush era, and then the Obama administration came and implemented them hastily and with unusually great speed. Such a pattern and such a reputation are a cause for embarrassment for some in the United States, where long-term strategic decision-makers, who are part not of the governing administration but rather of the “establishment,” devise strategies for decades, not years, in the country’s future. Part of this establishment pauses at such embarrassment and shame, especially as the new direction taken by the United States comes at the expense of the values which America had claimed to be an integral part of its structure that it would never abandon, no matter what. The other part says: “so be it” – America no longer needs to satisfy anyone or to pay the bill for being provided with oil and gas.

‘AAA’ rating can tolerate a substantially higher level of public debt than other ‘AAA’ sovereigns. Medium – The repeated brinkmanship over raising the debt ceiling also dents confidence in the effectiveness of the U.S. government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the U.S. economy. The ‘AAA’ rating reflects the U.S.’s strong economic and credit fundamentals, including: – Its highly productive, diversified and wealthy economy; extraordinary monetary and exchange rate flexibility; and the exceptional financing flexibility afforded by the global reserve currency status of the U.S. dollar and the depth and liquidity of domestic capital markets – in particular the U.S. Treasury market. The U.S. sovereign credit profile also benefits from the respect for property rights, the rule of law and a high degree of social stability. – Fitch continues to judge that the U.S. economy (and hence tax base) remains more dynamic and resilient to shocks than its high-grade rating peers. Fiscal and macroeconomic risks emanating from the financial sector are generally low and diminishing and becoming supportive of, rather than a drag on, economic growth. Fitch forecasts economic growth to pick up from 1.6% in 2013 to 2.6% in in 2014 and to average 3% over 2015-17, before reverting to its assumed long-run trend growth rate of 2.25%. The projected recovery is supported by easing headwinds from private sector debt deleveraging, a pick-up in the housing market and a gradual decline in unemployment.

Oil, Gas, and the New Relationship between the United States and Russia

The shutdown ended after president obama stared down house republicans, re-opening the government without making any of the big changes to obama care they demanded. But he is not declaring victory. Let’s be clear. There are no winners here. Reporter: No winners indeed. The 16 day shutdown cost by one estimate $24 billion and hurt u.S. Credibility around the world. The president placed 100 percent of the blame on republicans. You don’t like a particular policy or a particular president, then argue for your position. Go out there and win an election. Push to change it. But don’t break it. Reporter: The showdown left the republican party battered in the poles with party leaders placing the blame on senator cruz who kicked off the showdown with his 22 hour talk-a-thon last month against obama care.