Two pieces of news to report this morning, which don’t bode too well.
Overnight, US credit rating giant Fitch downgraded the value of US debt, just a notch from AAA to AA+. This doesn’t mean the US has any chance of going bust — since it controls and prints the dollar, if it needs more of them, more shall appear.
And in any case, the track record of rating agencies is not great. Where were they before the 2008 financial crash? Such warnings might have been helpful. They were in bed with investment banks insisting everything was hunky dory.
Still, Fitch saying lending money to the US just got riskier is not a good thing. It is muttering about governance and debt “limits” as if there were such a thing.
In the UK, Which? says the number of people missing their payments on essential household bills is as high as it is normally during the winter.
Since UK folk can’t whistle up money from nowhere, that’s bad, a sign of genuine human distress.
One in 20 renters and one in 30 mortgage holders defaulted on a payment, which given that the Bank of England is poised to increase interest rates yet again are figures that seem likely to get worse. What’s the upside here?
Well, only that the UK economy and individual consumers keep proving to be more resilient than the doomsters predict.
If you had believed most mainstream forecasters, including the Bank, we would already be in recession. So would the US.
Last week Lloyds Bank, which has nearly as much economic data as the Government, backtracked on its own prediction of a UK recession next year. That doesn’t mean things aren’t tough for many.
Still, the pessimists have been wrong so far. They should just carry on.
