'Double Dip' & 'Tea Party' rule downgrade crisis

Facing a 'Double-Dip' risk, the US government is blaming 'Tea Party' politicians for the situation, though these are the jargons associated with the economic scenario of the world's largest economy.

The unprecedented downgrade of the long-term sovereign credit rating of the US has thrown forward many more business jargons on the front pages of newspapers, leading to many racking their brain to understand these meanings.

For some, even a credit rating and the implications of a downgrade might also sound Greek and adding to their woes are typical financial terms like AAA, AA+, T-bills, sovereign rating and debt deal, besides simple-souding phrases with not-so-simple meaning, such as 'double dip' and 'tea party'.

However, the problem, triggered by the downgrade of the US, is very acute and sent policymakers from across the world into emergency meetings on weekend to tackle the situation.

A credit rating is a barometer of the borrowing profile of a company or a country and a downgrade in this rating generally makes the borrowings costlier and more difficult.

When this rating is assigned to a country, it is called a sovereign rating and it was downgraded for the US by the global rating agency major Standard and Poors' late on Friday.

Subsequently, the country might find its borrowing costs go higher and also some creditors might not be ready to lend due to the lower rating.

Ever since the US got its first rating in 1917, it has been enjoying highest possible rating, which is 'AAA', and which now has been lowered one notch to 'AA+'.

However, the downgrade does not mean that hell has broken loose as 'AAA' rating indicates an 'excellent' credit profile, while the lowered 'AA+' rating is given to an entity with 'very strong' creditworthiness.

The downgrade has come after concerns were raised regarding the US facing the risk of 'double dip recession' -- a term used to describe the situation when a country slips back into economic recession soon after recovering from a previous one.

Not long ago, the US was facing the risk of defaulting on its debts and therefore it sought an increase in its borrowing limit through what has now come to be known as 'debt deal'.

However, there was a strong political opposition to the deal proposed by the administration, which has been cited as a key reason for the downgrade by S&P.

On its part, the White House blamed the downgrade on "tea party" Republicans.