Eleven days after lowering the credit rating on the U.S. for the first time, Standard & Poor’s is suffering a downgrade among global investors as American bonds are proving world beaters -- undermining S&P’s mathematical assumptions -- and prompting disbelief among political scientists months after the company upgraded China because of the stability fostered by Communist Party rule.
The Securities and Exchange Commission is scrutinizing the method Standard & Poor’s used to cut the U.S.’s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter.
Former Federal Reserve Chairman Alan Greenspan said he expects stocks to continue their decline after Standard & Poor’s downgraded the nation’s credit rating, even as an S&P official predicted little market impact.
The U.S. is unlikely to regain its top long-term credit rating quickly even as the dollar remains the world’s main reserve currency, said Standard & Poor’s analysts David Beers and John Chambers in a conference call.
The e-mail message that unleashed hours of debate between U.S. Treasury Department officials and Standard & Poor’s arrived at 1:45 p.m. on Aug. 5, just as U.S. and European stock markets were limping toward the end of their worst week since 2008.
The yen and the franc climbed versus all of their most-traded peers, with the Swiss currency reaching records versus the euro and dollar, as Standard & Poor’s downgrade of the U.S. credit rating and the euro-region’s debt crisis spurred investor demand for safety.