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The Street
The Street
Tony Owusu

Kevin O'Leary Disagrees With Warren Buffett Over Fitch Downgrade

The state of the U.S. economy has been the talk of Wall Street this week after Fitch Ratings downgraded U.S. debt from its top AAA rating down a notch to AA+ -- for just the second time in history. 

This week, both Warren Buffett and JPMorgan Chase (JPM) -) CEO Jamie Dimon came out and expressed the utmost confidence in the U.S. economy. Buffett declared that Berkshire Hathaway purchased $10 billion in Treasury bonds last week, purchased another $10 billion this week, and that it will be purchasing another $10 billion next week regardless of the Fitch downgrade. 

DON'T MISS: Two Titans of Wall Street Just Blasted the Fitch Downgrade

But Canadian entrepreneur Kevin O'Leary has a different and more dire view of the U.S. economy. 

"There's no way to sugar coat this at all. It's bad. And I'll tell you how you measure it's bad. When you downgrade the U.S. economy, you are losing a little faith in the U.S. dollar and the U.S. Treasury bill," O'Leary said.

"Most sovereign funds keep the majority of their liquidity in U.S. dollars. That got hurt 24 hours ago... The bottom line for you and me is that the cost of capital goes up. In other words what it costs for us to borrow money to fund the government and deficit goes up."

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O'Leary goes on to say that the U.S. government is currently printing billions of dollars through the CHIPS Act and Inflation Reduction Act, and increasing the deficit -- all directly leading to the Fitch downgrade. 

For the average American consumer, O'Leary says the cost of your car loan "just went up from 5% to somewhere between 7% and 9%. So the cost of your loan and your borrowing and your mortgage going up, period."

Check out the full interview below.

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