US credit downgrade is not the end of the world
Given all the sensational stuff in the media, the following point of view might give a bit of balance.
US credit downgrade is not the end of world. Standard & Poor’s AA rating indicates a very strong capacity to meet financial commitments.
The Standard & Poor’s AA rating differs by only a small degree from the highest rating of AAA and the current US rating is AA+. Then there is the AA stress scenario where any issuer or obligation rated ‘AA’ should be able to withstand a severe level of stress and still meet its financial obligations.
Such a scenario could include GDP declines of up to 15%, unemployment levels of up to 20% and stock market declines of up to 70%.
Australia’s S&P rating is AAA.
http://www.standardandpoors.com/ratings/definitions-and-faqs/en/us
Les Pickett is an adjunct of Victoria University, member of the Australian Government Consultative Committee on Knowledge Capital, member of the International Board of Advisors International Public Management Association for Human Resources, former Deputy Director United Nations System Staff College, Past National President Australian Institute of Training and Development, Past Chairman Executive Board International Federation of Training and Development Organisations and International President Institute of Business Administration.
