Fitchs decision to strip the US of its AAA credit rating is irresponsible and a

Mohamed El-Erian, a well-known economist, has expressed his disagreement with Fitch Ratings’ recent decision to downgrade the credit rating of the United States. El-Erian joins other economists who have also criticized this move.

Fitch Ratings recently made the decision to strip the United States of its AAA credit rating, citing concerns about the country’s high levels of debt and political gridlock. However, El-Erian and his economist peers argue that this decision is unwarranted and could have negative consequences for the global financial system.

El-Erian believes that Fitch’s decision does not adequately consider the US economy’s fundamentals and its ability to meet its debt obligations. He argues that while the US does have significant levels of debt, it also possesses a robust and diverse economy that can generate the necessary revenue to address these obligations.

Moreover, El-Erian emphasizes that political gridlock, which was cited by Fitch as a reason for the downgrade, is not unique to the United States. Many countries around the world face similar challenges, yet they have not experienced the same downgrades. He believes that Fitch should take a more comprehensive and balanced approach when assessing a country’s creditworthiness.

El-Erian’s critique, along with that of other economists, highlights concerns about the credibility and impact of credit ratings agencies. Many argue that these agencies have a history of being reactive rather than proactive, often downgrading countries after major economic crises. They also raise questions about the influence these agencies have on financial markets and the potential for their decisions to cause unnecessary volatility.

In conclusion, El-Erian and other economists have criticized Fitch Ratings’ decision to downgrade the United States’ credit rating. They argue that the decision overlooks the country’s economic fundamentals and fails to consider the broader context of global economic challenges. Their concerns highlight the need for credit rating agencies to take a more comprehensive and proactive approach when assessing countries’ creditworthiness.

Image: https://weeklyfinancenews.online/wp-content/uploads/2023/07/csm_04_Banking_Finance_4477ca2e37-1.jpg