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Monday, August 08, 2011

Monday meltdown--'it's the Tea Party's fault'?

Asian markets last evening predicted today's scenario--a Monday meltdown at the U.S. Stock Exchange as the market lost 330 points within the first hour of trading. Asia-Pacific stock exchanges began losing as soon as they opened last night, and the losses continue today.
Analysts widely agree that today's meltdown is in response to Standard and Poor's decision to downgrade the U.S. credit rating based upon the failure of the Obama Administration to reduce federal spending in order to address American debt, which now stands at 14.5 trillion dollars.
Standard and Poor's had stated that the nation needs at least 4 trillion dollars in spending cuts in order to avoid a hit to its credit rating and that it may downgrade the rating yet again unless progress is made toward reducing the debt.
But today's market meltdown is further fueled by another decision by Standard and Poor's that casts a negative shadow on the entire U.S. economy. The credit rating giant downgraded the rating of FannieMae, FreddieMac, and 32 banks and credit unions.    
Further, Standard and Poor's stated that it is also evaluating state and local governments in the U.S. for possible downgrades.

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