Following on from the Chrysler story of third world shenanigans, we have the news that at least one Wall Street bear thinks that the US may lose its AAA credit rating. Technical analyst Robert Prechter, known for predicting the 1987 stock market crash, said he sees the United States losing its rating by the end of 2010, as the government issues trillions of dollars in debt to fund efforts to bail out the economy.
Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.
The economy "is obviously heading toward a depression," despite the government's efforts, said Prechter. Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom. "It's the next leg down (in stocks) that will make it clear that these things are not true," Prechter said.