Rising US debt cause for concern: S&P

Facing criticism inside the US for downgrading America’s credit rating from AAA to AA+, the Standard and Poor’s Indian-American President, Mr Deven Sharma, today said that the agency’s decision was made mainly because of the rising debt levels and the process of resolving things.

“Our role is to call the risks objectively, with transparency, and that’s what we try to do to fulfil our role and that’s what our job is for the benefit of investors,” Mr Sharma told the CNBC news channel in an interview.

Going from AAA to AA+ rating, he argued, doesn’t mean the US is going to default. “It just means its more risky today than a year ago.”

S&P, Mr Sharma argued, factored in the political process of the United States in its calculation because it “speaks to how the fiscal, economic and monetary choices are being made’’.

“S&P’s view was based on a number of factors including projections of rising debt levels,” he asserted.

The agency has been facing criticism in the United States after it downgraded its credit rating. In fact top American leadership have been questioning its credibility.

Mr Sharma said he is pleased by the US President Mr Barack Obama’s speech in which he addressed the need for US lawmakers to have a new sense of urgency to tackle long-term deficit spending.

Acknowledging that S&P committed mistakes that played a part in the sub-prime mortgage crisis, Mr Sharma said the credit rating agency has learnt lessons from its past mistake.

“Clearly the housing declines were much more severe than we forecast or anticipated,” he said.

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