On Friday, August 5, 2011, the world woke up to a reality that the USA had lost its credit rating of triple A. This means that the USA is no more the haven for investment it always was. The main reason for this credit rating downgrade was the politicking in Washington at the cost of the overall interest of the world in general and Americans in particular. The timing for this downgrading couldn’t have been worse. Europe was already in the midst of debt crisis with Greece, Portugal, and Ireland on the brink and seeking bailout packages from their EU partners; and Italy also looking very vulnerable. The tremors of these economic upheavals are now felt all over the world. Global stock markets and currency markets are on a swing with trillions of dollars lost in the stock markets and investors finding safety in investing in gold. We are indeed living in a world where the economic volatility in the one hemisphere is affecting governments, large investors, banks, MNCs and people all over the world.
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SP Jain School of Global Management,
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