The United States has lost its sterling credit rating.

Credit rating agency Standard & Poor's on Friday, 5 Aug 2011, lowered the nation's AAA rating for the first time since granting it in 1917.

S&P cited dysfunctional policymaking in Washington as a factor in the downgrade. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed."

S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade, to AA, would occur if the agency sees smaller reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.

Peter Morici, a University of Maryland business economist, said, "The United States deserves to have this happen," because of its clumsy handling of fiscal policy.



Read more: http://www.foxnews.com/politics/2011/08/05/us-official-says-sp-reconsidering-us-credit-downgrade/#ixzz1UEfeIg7D