The financial significance of the US losing its AAA credit rating is small compared with the psychological effect. With $14.3 trillion of national debt, a rise in borrowing costs of just one basis point would add more than $14bn a year to the interest bill, but losing the treble-A rating could cost the US its role as the world’s central banker.
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United States citizens fill in their census forms on 1 April and it is just as well the ten-yearly statistical exercise is not used to assess employment.
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Like F1 “fans” waiting for a car crash, international investors are watching to see who loses its AAA credit rating first – the United Kingdom or United States. Both countries have huge budget deficits and high debt: so which will be stripped of its top rating, or will both be downgraded?
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If the UK economy revolves around housing, the pivot of the American economy is the motor car. That’s why the US carmakers can claim a $34bn bail-out is about saving the country rather than rescuing their companies.
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