Standard & Poors cut Japan’s debt rating while Moody’s warned that the USA’s triple-A rating was at risk. The IMF had harsh words for both nations.
“In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment,” the IMF said.
“Renewed market pressures in some advanced economies demand that these countries underline their commitment to their deficit targets and devise contingency plans to ensure that adjustment goals are met,” it added.
While Europe was cutting its deficits, the IMF said new tax cuts in the United States and increased spending in Japan had set back progress in rich nations more generally.
As we already know, austerity and the like pose threats to what meager economic growth exists in the west. Growth is needed to reduce debt to GDP ratios.