Global investment heavyweights are issuing warning messages one after another regarding the U.S. government's downgrade of its national credit rating, which impacts global financial markets. It is pointed out that this is not merely a credit rating adjustment.
Ray Dalio, founder of Bridgewater Associates, and Jamie Dimon, Chief Executive Officer (CEO) of JPMorgan Chase, both noted in separate public statements on the 20th (local time) that the complacent atmosphere and undervalued risk perception spreading throughout the market could pose an even greater threat.
Dalio assessed that Moody's recent downgrade of the U.S. credit rating from the highest rating of 'AAA' to 'Aa1' reflects 'only a part of the actual risks faced by creditors.' He particularly warned, 'Credit ratings only reflect the government's likelihood of not repaying its liability, but the U.S. is a country that can print money to repay its liabilities,' emphasizing that the risk of eroding the real return for creditors through inflation is much greater.
He also pointed out on his social media (SNS) that 'the credit rating downgrade is merely a visible risk,' and from the perspective of investors who value money, the risk of U.S. liabilities is much greater than what credit rating agencies state.
Dimon, during an Investor Day event held on the same day, strongly criticized the excessive optimism in the market and the insensitivity to geopolitical and economic variables. He said, 'Current credit is a bad risk,' noting that 'those who have not experienced a major crisis have lost their sense of what could happen in the credit market.'
Dimon warned especially regarding the potential for inflation and stagflation, the escalation of geopolitical tensions, and the overvaluation of U.S. asset prices, stating that 'market participants are in a dangerously complacent state.' In light of recent rising global trade tensions related to tariff policies, he indicated that a short-term rebound might obscure structural risks.
Dimon assessed that 'when the market drops 10% and then rises 10% again, that is an astonishing level of complacency,' indicating that the market's reaction to major economic variables such as tariffs, interest rates, and exchange rates is more optimistic than reality. He also added, 'The very attitude that leads us to believe we can predict outcomes is itself a risk.'
Dalio also noted, 'While U.S. Treasury Bond revenue rates are rising, this does not mean confidence is being restored,' adding, 'The downgrade of credit ratings is merely a symbolic damage; the real issue is the atmosphere where investors do not see U.S. assets as safe as before.'
Such comments are interpreted as emphasizing that the concern regarding market reactions is greater than the downgrade of the U.S. credit rating itself. Both figures warned that excessive optimism hides structural issues such as liabilities, inflation, and geopolitical risks.
Amid all this, U.S. Treasury Minister Scott Vilsack sparked controversy by downplaying Moody's credit rating downgrade as 'merely a lagging indicator.' Minister Vilsack claimed that Moody's decision was due to spending by the Biden administration, but Democrats criticized this as 'an irresponsible response that downplays the economic crisis.'