IN A move that has toppled the United States off its supremacy in the backdrop of rising debt burden and rising deficits, credit rating firm Standard and Poor (S&P) placed the world’s largest democracy in the AA position from the earlier AAA.

In a statement released by the organisation, it was quoted by leading dailies across the world that the downgrade reflects their opinion - that the fiscal consolidation plan that Congress and the administration recently agreed to fall short of what, in their view, would be necessary to stabilize the government's medium-term debt dynamics.

Earlier on August 2, President Barack Obama had signed a legislation that aimed at reducing fiscal deficit by $2.1 trillion over a decade against the $4 trillion it had benchmarked for savings. The move was lauded by S&P stating that the move came as a good down payment so as to fix the dwindling finances.

Over the last ten days, S&P 500 stock index dropped by 10.8 per cent over the fears of another recession in the offing by the United States as well as the already suffocated European economy.  

Adding to the woes is the US Treasury Bonds, which were once seen as the safest form of securities in the world. Right now, they feature below security bonds from France, Germany, Canada or Britain.