Recently, this relationship has been called into question as Puerto Rico faces a looming debt crisis that could set the island’s economy back by more than a decade.
Standard & Poor’s (S&P), one of the big three global ratings agency, on Monday followed the data, too, by downgrading its credit outlook from ‘stable,’ to ‘negative’ for United States sovereign debt – better known as US Treasury notes. The decision by S&P’s sovereign debt analyst, Nicola Swann – known cynically by some traders as the new ‘Black Swann’ – to downgrade US sovereign debt outlook roiled Global Markets, underscoring the growing view that America is a superpower in decline.
S&P, a premier global credit rating agency, is growing increasingly concerned that many companies in the United States could find it difficult to refinance their enormous debt loads in the coming years, possibly leading to an explosion of defaults and bankruptcies.
Political and sovereign debt risks in Spain, conflict in the Korean peninsula and US economic uncertainty send global markets tumbling in May.
The EU Council leaders were meeting this week to determine how best to prevent a default of Greek sovereign debt by common support. The council issued a statement of support with no details as talks continue.
Financial markets continue to be roiled this week over fears that a European debt crisis could derail the global recovery. Investors are spooked by the debt problem in Greece – a possible precursor of what may happen in the U.S. Investors fear Greece may default on its sovereign debt, or require a bailout from already strapped European governments. Those concerns are spreading to other financially troubled governments in Europe.
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