Summarizing US economic events: Credit rating,S&P; warning, US debt Limit, Deficit cuts, Defaults, Housing double dip.

As we look around the headlines about economies, if we put Europe aside, the only headline buzzing all over is United States has reached its maximum debt limit and have little fund left to survive till August 2 before it starts defaulting on its debt obligations.

Earlier,end of last month, S&P rating agency has issued a warning regarding sovereign credit rating downgrade that is AAA for US as of now. S&P put its outlook on US debt as negative and said if US won't address issues regarding deficits in coming 2 years, it will lower its credit rating. Initially stock markets reacted negatively to the news and we had seen some correction for  a day or two. But after initial reaction, stock market continued its up move and touching new highs after 2008 market corrections. Something ironic reaction from stock markets, but if we see the facts and compare it with 1988 economic downturn, right now US is in the way better position, Read Detailed article here


After that warning from S&P, now the buzz on wall street is US has reached its debt limit on Monday may 16 2011, means now US can't borrow more money. For temporary expenses, US started using Pension Funds' money, which will last till August 2 2011 according to the data Read More. Meanwhile there is an intense debate is going on between Democrats and Republicans, regarding increase in Debt limit and/or substantial spending cuts to cut the deficits. World is waiting for an agreement between two parties that will agree to both the conditions and US might be saved from its debt obligation defaults, which will start happening from August 2. Obama Administration said to agree on spending cuts for allowing government to increase debt limit and continue borrowing Read More


China, who is highest foreign buyer of US government Debt ( Bonds ) is now being cautious since last five months and reducing its positions in US bonds by selling them Read More, also, big investors are reducing their US bonds buying and being cautious about this political drama. US bonds are not very lucrative investment option as there is slow growth in US,low interest rates, weak dollar, inflation and deadline for US debt defaults.

Meanwhile,Sentiments of global investors are turned negative that world economy will grow in coming years.Read More. More investors are being less optimistic about global growth and being bearish on world economy due to already struggling US economy, Europe crisis about to spread, Developing countries like India and China are dealing with inflation and price hikes as cheap dollars are keep moving in those developing countries to get better returns on investments. Read More

.US government has no plan to hike interest rate until early or late 2012.

As per latest housing report, US housing prices have started falling again and it is at 2009 low.and more homeowners are holding underwater mortgages means they have more amount of mortgage loans than the price of the home as today.Read More.

US now dealing with so many economical problems at same time. If any of the problem get worsen, then we might see dire consequences in US and in Global Economy. US economy will collapse and crisis will spread throughout the world. As dooms day coming near, this might be a list of problems indicating 2012 might be the end of world ( Just kidding ).
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