Stock Markets in US Crisis. Many concerns arise after debt downgrades United States (U.S.) by Standard & Poor’s (S & P) from AAA to AA+. Nouriel Roubini, a professor from New York University, predicts the U.S. will experience further crisis (double-dip crisis). Debt downgrades would greatly affect investors in financial markets. Almost all of the capital markets worldwide has decreased. Asian stocks fall equally exciting. Kospi (South Korea) have declined nearly 10 percent.
Concerns still remain, because of investor behavior is strongly influenced by the panic factor, rather than rational calculation. In the U.S., so even a serious crisis, because it involves the investor confidence in the authority (government). Actually, what is wrong if the U.S. debt ratio exceeds 100 percent? Japan even has a debt ratio of approximately 200 percent. However, investors do not experience panic. The most fundamental problem of the U.S. economy, the uncertainty of the economic situation, followed by political uncertainty. The investors do not see prospects for economic recovery, during fighting between the Democrats and Republicans are still ongoing.
Although they agreed to raise U.S. debt ceiling, but the Republic managed to push an agenda to reduce the deficit by $ 2, 4 trillion over the next 10 years. In the eight-page press release, stating the reason the S & P downgrades debt is a matter of effectiveness, stability, and certainty of decision making as well as U.S. political institutions associated with the economic challenges ahead, as well as fiscal conditions.
Important consideration is the reduction in rating of political uncertainty. With a very limited space, it is difficult for the government to conduct an economic stimulus. Therefore, theoretically, the value of investments in U.S. dollars declined. U.S. debt rating is under Germany for example.
However, in reality investor still holds the U.S. bonds with interest rates unchanged. That is, the stock market moves beyond the linear logic. They panicked to the decline of U.S. debt rating, but they still hold U.S. investment instruments.




