For a country's economy there can be no higher accolade, perhaps, than a "triple A" rating from the world's top credit-rating agencies. It's a sign to foreign investors that there is no safer place to invest their money.
But the number of those countries is diminishing. Spain and Ireland were the first this year to lose their AAA status. And last week Standard & Poor's warned that Britain's AAA rating was at risk because of rising debt.
But Standard & Poor's announcement wasn't a downgrade. What the ratings agency did was revise its outlook for Britain to "negative" from "stable."
The reason -- Britain's rapidly rising government debt, which it said could reach the equivalent of the country's entire annual economic output.
The May 21 statement was enough to rattle financial markets in the United Kingdom -- but also across the Atlantic.
That's because authorities on both sides are taking similar measures to fight the worst recession in decades. Hence a lot of speculation about whether the United States' triple-A rating could also be at risk.
"The link is to do with investor concerns about the budget deficits, the increase in budget deficits on both sides of the Atlantic, a similar increase in levels of government debt relative to the size of the economy," says Neil Mackinnon, chief economist for ECU Group, a London-based financial firm.
"And in the longer term, if both budget deficits and level of debt keep on rising the way they have done, particularly given the costs of bailing out the banks both sides of the Atlantic and given the costs of the financial crisis," he adds, "if that continues to escalate there will be worries about how the U.K. and U.S. can fund themselves over the longer term."
Costs Of Borrowing
That's why markets were unnerved, helping push the dollar on May 22 to its lowest level this year, with the euro rising above $1.40.
It didn't help that influential investors like Bill Gross and Jim Rogers weighed in, too.
Gross, who manages the world's biggest bond fund, said last week he believed the United States would eventually be downgraded, while Rogers said it should have happened already.
The alarm was sounded earlier this month, too, by David Walker, a former head of the U.S. Government Accountability Office.
In a "Financial Times" article he cited a year-old warning from Moody's rating agency that the United States risked losing its AAA rating because of rising health-care and social-security costs.
A downgrade from AAA -- a rating the United States has held since 1917 -- would have unpleasant implications for a country that in recent years "has been very dependent on foreign investors rather than domestic investors to fund its budget deficits. Americans have been spenders rather than savers," Mackinnon notes.
He adds that this "puts America in a tricky position. America's Achilles heel is this dependency on foreign savings. With the loss of a triple A credit rating, that will accentuate potential funding pressures. As we've seen in recent days in the financial markets, the dollar has weakened on the exchanges, we've seen longer-term bond yields go up.
"So the price you pay for losing your credit rating is an increase in the cost of funding and the knock-on effect for people in the real economy means higher mortgage rates, generally higher borrowing costs, and that's not good news for the economy going forward."
To be sure, the concerns of a possible downgrade are just that -- no rating agency has yet put the United States on watch, though Moody's on May 21 said the AAA rating faced "longer-term pressures." Gross said a downgrade might not happen for several years.
The White House has also sought to reassure. Asked on May 22 if President Barack Obama was worried his policies might lead to a credit downgrade, spokesman Robert Gibbs said, "No, we're not concerned about a change in our credit rating."
Gibbs said that what Obama "is focused on and has been since coming into office was getting in place a recovery plan that will create jobs and get this economy moving again. Short-term, the way to bring down the deficit is get this economy moving again. Medium- to long-term, we have to get our fiscal house back in order, and that's why the president was pleased that Congress passed a budget that cuts the deficit in half in four years."
But the specter of a credit downgrade underscores the scale of the challenge -- trying to ensure recovery while putting the financial house in order.