Global events must keep us on our toes
TURMOIL in financial markets is a daily occurrence. Yesterday was different because the turbulence sprang from such an unusual source.
The Standard and Poor's credit rating agency gave a "negative" rating, not to some debt-burdened, misgoverned small country but to the rich and powerful United States. Yet the reason was simple and predictable. The US has a staggering public deficit. It is one of only three countries in the developed world -- the others being Ireland and Japan -- with a deficit of more than 10pc.
Both President Barack Obama and his Republican opponents in Congress recognise the need for dramatic action. Both propose budget cuts amounting to an astronomical $4 trillion. But they are divided on the timescale and the method of achieving the cuts. In particular, the Republicans dislike any proposal for tax increases.