What Does the S&P Credit Downgrade Mean?
What Does the S&P Credit Downgrade Mean?
What Does the S&P Credit Downgrade Mean?
Mercatus economist Veronique de Rugy looks at what the S&P downgrade means for investors and the future.
"While Treasuries may not look good, as long as it looks better than the rest, even a downgrade doesn't necessarily mean a flight away from Treasuries in the short run," said de Rugy. “The United States has its fair share of problems, but we aren’t the ugliest at the beauty pageant. It may not be much comfort, but other European countries are much worse off, and that saves us for now.”
Lawmakers missed their opportunity, said de Rugy.
“The threat of a downgrade gave lawmakers on both sides some political coverage to talk about reforming entitlement spending —the source of the spending explosion in upcoming years,” she said. “They could have proposed fixes like moving the eligibility age for both Medicare and Social Security, which is where the biggest savings are.”
“Hopefully a downgrade, although the consequences will be expensive, is the wake-up call the U.S. needs to address the drivers of our long-term debt problem,” said de Rugy.
De Rugy has also blogged on this topic at NRO's The Corner.