Standard & Poors today said there was a one-in-three chance it would lower the U.S.'s long-term triple-A rating within two years. The ratings company cited lack of action taken by U.S. fiscal policy makers, particularly compared to other countries.
An eventual US downgrade would further catalyze China to decouple the yuan from the dollar, continue their consumption of hard assets, and thus potentially enable China to unload U.S. treasuries faster. With each passing day, the chances of the dollar losing its status as the world's reserve currency increases. It may take a number of years for this to occur, but the clock is ticking.
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