Blackstone CEO Stephen Schwarzman Agrees With Fitch Downgrade of U.S. Debt

Background

Fitch Ratings recently downgraded the long-term U.S. debt rating from AAA to AA+, citing concerns over increasing debt and a lack of confidence in fiscal management. This is the first downgrade by Fitch since 2011 when Standard and Poor made a similar move. Stephen Schwarzman, CEO of Blackstone, shares the same perspective as Fitch regarding the downgrade.

Schwarzman’s View

During an interview on AsumeTech’s “Squawk Box,” Schwarzman discussed the rationale behind the Fitch downgrade. He expressed regret but acknowledged that the numbers justify it, considering the significant increase in debt since the global financial crisis without much evidence of future discipline. However, Schwarzman pointed out that the U.S. still holds the status of the world’s reserve currency, which provides some reassurance to investors. When global crises occur, countries with AAA ratings buy U.S. securities, helping to maintain stability.

A Cautionary Sign

Schwarzman emphasized that while the U.S. being the reserve currency offers some protection, the downgrade should serve as a warning. It indicates that there are underlying issues that need to be addressed, and it should not be taken lightly.