Global Financial Crisis. United States debt is downgraded from AAA to AA+ by one of the major rating agencies, Standard & Poor’s. This is the first time in US history. The decision follows weeks of discussions in Washington between Democrats and Republicans to raise the debt ceiling and avoid state bankruptcy, which conclude with a last-gasp agreement on Sunday before a possible default, which would have occurred on Tuesday. The uncertain situation causes a debacle across global markets. In particular, Italian government bonds (BTPs) are being sold by the German central bank, further widening the spread between BTPs and German Bunds to nearly 400 basis points (4%).
