Wednesday, August 10, 2011

Indian behind the Downgrading of America

Credit rating firm Standard & Poor’s, which stripped the U.S. of its top-notch triple-A credit rating on Friday, is headed by India-born Deven Sharma.

The downgrade has sent jitters across governments and investors around the world as they try to figure out what this means for them and whether the downgrade could trigger a major market downturn. Major European governments, for instance, held an emergency meeting on Sunday to chart their plan of action.

Meanwhile, S&P has received a lot of flak for the downgrade, especially from U.S. Treasury officials  who complained there was no justification for it and noticed a $2 trillion error in S&P’s calculation.

In an interview with The Wall Street Journal published on Sunday, Mr. Sharma said the rating cut was in the best interest of investors. “Our ratings are forward-looking. And part of making ratings forward-looking is for the benefit of investors, to give them a view about how we see the future risks of the credit unfolding,” he said.
It remains to be seen what the long-term impact will be but, in the short-term, stock investors have been hurt.

Asian markets were trading lower midday Monday and India’s benchmark Sensex fell to a 14-month low in morning trading, losing 2.7% to touch 16,835.

But who is Mr. Sharma, the president of S&P?  As the company’s president, he also oversees S&P’s analysts in the rating committees. They are the ones who decided to downgrade the U.S.’s credit rating. Mr. Sharma has been at Standard & Poor’s since 2006 as executive vice-president and was promoted to president a year later. Before that, he was an executive vice-president at The McGraw-Hill Companies, S&P’s parent company, for five years.
Shefali Anand in Wall Street Journal. More Here
 Read Q&A With S&P President Deven Sharma here

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