Paris, Aug 7 (Newswire): Europe was taken aback at the unprecedented downgrade of America's sterling sovereign credit rating, as officials of the Group of 7 industrial countries decided whether to hold an emergency conference call to discuss the debt crisis that has beset Europe and the United States.
While officials in both Europe and Asia had girded for such a possibility, the news that Standard & Poor's had lowered Washington's AAA rating to AA+ was nonetheless received with a degree of concern in the corridors of power on the Continent.
The French finance minister, François Baroin, questioned the move, which he said appeared to be based on "nonconsensual figures."
The Obama administration had disputed the judgment, noting that Standard & Poor's had made a significant mathematical mistake and overstated the federal debt by about $2 trillion.
Standard & Poor's said the downgrade was based more on the view that the effectiveness, stability and predictability of American policymaking had eroded during the rancorous debate over lifting the debt ceiling.
Mr. Baroin said he found it curious that neither Moody's nor Fitch, the two other major ratings agencies, had reached a similar conclusion. Moody's has said it was keeping its AAA rating on the nation's debt, but that it might still lower it.
"We have total confidence in the solidity of the American economy," Mr. Baroin said in an interview on French radio. Nonetheless, he added, the decision "confirms" that the world's most developed economies are confronted with the same urgent priorities: to lift growth and reduce public and private debt.
The Australian prime minister also warned against overreacting to the downgrade. Standard & Poor's "had been signaling for some time that unless they saw a certain figure of budget cutbacks out of the discussion that there's been in Washington about the American budget and fiscal consolidation, that they were intending to do that downgrade," Prime Minister Julia Gillard said.
"At the same time, the other two major ratings agencies, Moody's and Fitch, continue to have the American economy rated at AAA. So I think people just need to look at all of the facts."
Japan's reaction was also more muted, according to media reports. Officials in Tokyo said their trust in American Treasuries remained unchanged. In Germany, however, commentators saw the downgrade as further evidence of the decline of American prestige.
The weekly newsmagazine Focus called the downgrade "a public humiliation." The magazine noted a scolding that the United States received from Chinese officials.
"Now the country must allow itself to be reprimanded and lectured before the eyes of the world," Focus said, referring to the United States.
While officials in both Europe and Asia had girded for such a possibility, the news that Standard & Poor's had lowered Washington's AAA rating to AA+ was nonetheless received with a degree of concern in the corridors of power on the Continent.
The French finance minister, François Baroin, questioned the move, which he said appeared to be based on "nonconsensual figures."
The Obama administration had disputed the judgment, noting that Standard & Poor's had made a significant mathematical mistake and overstated the federal debt by about $2 trillion.
Standard & Poor's said the downgrade was based more on the view that the effectiveness, stability and predictability of American policymaking had eroded during the rancorous debate over lifting the debt ceiling.
Mr. Baroin said he found it curious that neither Moody's nor Fitch, the two other major ratings agencies, had reached a similar conclusion. Moody's has said it was keeping its AAA rating on the nation's debt, but that it might still lower it.
"We have total confidence in the solidity of the American economy," Mr. Baroin said in an interview on French radio. Nonetheless, he added, the decision "confirms" that the world's most developed economies are confronted with the same urgent priorities: to lift growth and reduce public and private debt.
The Australian prime minister also warned against overreacting to the downgrade. Standard & Poor's "had been signaling for some time that unless they saw a certain figure of budget cutbacks out of the discussion that there's been in Washington about the American budget and fiscal consolidation, that they were intending to do that downgrade," Prime Minister Julia Gillard said.
"At the same time, the other two major ratings agencies, Moody's and Fitch, continue to have the American economy rated at AAA. So I think people just need to look at all of the facts."
Japan's reaction was also more muted, according to media reports. Officials in Tokyo said their trust in American Treasuries remained unchanged. In Germany, however, commentators saw the downgrade as further evidence of the decline of American prestige.
The weekly newsmagazine Focus called the downgrade "a public humiliation." The magazine noted a scolding that the United States received from Chinese officials.
"Now the country must allow itself to be reprimanded and lectured before the eyes of the world," Focus said, referring to the United States.
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