President Barack Obama's former economic advisor today warned of a new recession plaguing the American economy, even as he attacked the S&P's track record, which has downgraded country's credit rating from AAA to AA+.
"S&P's track record has been terrible, and as we have seen this weekend, its a arithmetic is worse. So, there's nothing good to say about what they've done," Larry Summers, the former economic advisor to US President Barack Obama, told CNN in an interview.
"But that's not the large issue here. The large issue here is that the House majority played chicken with America's credit worthiness, and America's families are going to be the losers, losers in terms of higher interest rates on their mortgages, losers in terms of what this is going to mean for employment, that we've got critical economic problems," he said.
Standard & Poor's yesterday for the first-time downgraded the US credit rating from AAA to AA+.
"The critical economic problem of slow growth and lack of jobs, the critical economic problem of a long-run, budget situation that needs to be adjusted and needs to be adjusted in a rational way, and we have to find balanced approached going forward. Balanced approaches to focus on the jobs deficit," Summers said.
The United States is going to pay its debts, he said.
"Look S&P said to sell, Warren Buffett said to buy. That should tell you something about the quality of US bonds," he added.
"At the same time, this happened because S&P was seeing what most Americans are feeling, which is unhappiness with the solutions that are coming out of Congress for critical economic problems.