Change in US Credit Outlook

The decision by Standard and & Poor’s to change the United States’ credit outlook to negative was simultaneously unwelcome and welcome. It immediately sent the stock market shuddering into a significant drop. But on a brighter note, perhaps it will help serve as a wake up call to legislators in Washington that America’s fiscal position is simply, incontrovertibly unsustainable. The recent agreement between the two parties on a deal for the current fiscal year – as hard fought as it was – represents only the most trivial down payment on what will be required to fundamentally improve the nation’s budgetary outlook. Over the next several months, the issue will be joined as the two sides try to reach an agreement that will include lifting the debt ceiling — and the markets will be watching closely.