The pristine universe of triple-A rated countries got a whole lot smaller this week after the U.S. was stripped of its top-tier rating.
It¡¯s the latest example of a decadelong trend in developed economies as worries about high and rising debt burdens come to the fore. After Fitch Ratings cut the U.S. to AA+, the firm said its ranks of AAA rated nations are down to 9, making up just 6% of government debt globally ¡ª from 41% before.
To be clear, there¡¯s nothing particularly new about Fitch¡¯s downgrade. Brinkmanship over America¡¯s borrowing authority, aka the debt ceiling, has turned into something of an embarrassing hallmark of U.S. politics. And demand for Treasuries, the world¡¯s de facto risk-free asset and global benchmark for borrowing costs, is unlikely to vanish despite ballooning U.S. deficits. (Then, there¡¯s the whole other argument that ratings are largely irrelevant.)
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