When S&P downgraded the US Credit, everyone argued that it was just one misguided company. Now we learn that Fitch Ratings has given the US government until 2013 (aka after the US elections) to clean up its act and come to the market with a concrete plan to address their deficit problems.

The agency said "The negative outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path and secure the U.S. AAA sovereign rating will be forthcoming." They also said that there is a greater than 50% chance that the downgrade will happen.

Never has a US election been more important to the future of their country. If the population chooses to ignore free market economics, and instead encourage socialist policies, then the result will be the serious devaluation of their currency and a substantial shift in world economic power. Could a big knock against the US dollar be the shock that finally pushes the Euro as the dominant world reserve currency?

It is important to remember that Russia and China have already tabled recommendations to replace the world reserve currency (currently the US$) with a new issue controlled by the International monetary fund, which would be benchmarked against a basket of currencies. Zhou Xiaochuan, the China Central Bank Governor, has said this is needed to address "the obsolescent unipolar world economic order." China own a large portion of outstanding US debt. What would happen if Fitch downgraded the US debt and China decided to exchange its US bonds for a more balanced basket? It could be disastrous to the US economy.