No longer so creditworthy
On Wall Street, stocks are plummeting. In all fairness, rating agencies should react to the stock market crash – and downgrade the USA.
The US economy is in free fall. When President Donald Trump took office, the stock market was still jubilant, with shareholders looking forward to lower taxes and deregulation. But now, fear of Trump's brutal and contradictory economic policies has reached Wall Street. His back and forth regarding tariffs, declining consumption, widespread cuts and layoffs, and fears of recession: US stocks are tumbling on the stock market.
It's not just the electric car company owned by tech billionaire and presidential advisor Elon Musk that's currently losing billions . Trump has, after all, announced he's buying a Tesla. Those who should now follow suit are the leading credit rating agencies S&P, Moody's , and Fitch. They're all based in the US and have a hard time downgrading industrialized countries. The rating agencies assess the risk of countries defaulting on interest and principal payments on their debt.
There are now numerous studies describing rating agencies' bias against developing countries. This became particularly clear during the COVID-19 pandemic, which sent countries around the world into recession, but ratings downgraded primarily African countries . This is even playing an increasingly important role at the World Bank and the IMF.
The US has already been downgraded once . The reason was declining revenues and rising debt – and political wrangling over the lifting of the debt brake, which, according to Fitch, "undermined confidence in fiscal management." The current situation, in contrast, is far more dramatic – and pure chaos. So, please, it's your turn, rating agencies!
