'No Way To Sugar Coat This. It's Bad': Kevin O'Leary Gives Grim Outlook On The Economy Under Bidenomics After Credit Downgrade

Shark Tank millionaire Kevin O’Leary did not have positive things to say over the recently downgraded U.S. credit rating, telling every American in simple terms that there is “no way to sugar coat this” and “it’s bad.”

On Tuesday, Fitch, a capital market company that is responsible for rating credit, downgraded the credit rating of the country from AAA to AA+, per Axios. The agency pointed to the rising debt levels in the country and the polarization of politics as a reason that the U.S. could be less likely to pay its debts in the future. 

The move is seen as largely symbolic but has still seen notable real-world effects, including a massive drop in Wednesday stocks, per CNN. Major companies like Amazon, Meta, Apple, and others all saw major declines in their value. 

With the announcement, O’Leary was not speaking positively about the effects it could have, saying on Fox News, “There is no way to sugarcoat this at all. It's bad. And I'll tell you how you measure it's bad. Basically, when you downgrade the U.S. economy, which is what this downgrading is, you are losing a little faith in the U.S. dollar and the U.S. Treasury bill because the default currency of the world, defined by every commodity priced by U.S. dollars, is the good faith of the U.S. government and the whole world. Trust it.”

“Most sovereign funds keep the majority of their liquidity in U.S. dollars,” he continued. “That got hurt 24 hours ago because now you start to ask yourself, well, where is this going? A downgrade from AAA to AA, does it go to single? Now, if you're a sovereign wealth fund, you start to put that in your mind. And the bottom line for you and me is the cost of capital goes up. In other words, what it costs for us to borrow money to fund the government and deficit goes up. No sugarcoating that.”

“Now, how does this actually affect the next 24 months? Well, let me explain. Think about the CHIPS Act and the Inflation Reduction Act. We're printing billions of dollars. Government claims it has merit. It's important to do this. But at the same time, that's just a lot of spending, and that increases the deficit,” he went on to say.

“And that's why Finch did this. They downgraded it. And I wouldn't say it was the two bills that caused the camel's back to be broken, but it was enough for them to say, OK, I've seen enough now for me and you or anybody. The kitchen table in America, your car loan just went up from five to somewhere between seven and nine percent. That's not going to help. So the cost of your loan and your borrowing and your mortgage going up, period,” he finished. 

The rating drop is undoubtedly a concerning event for everyone. The effects may seem small at first, but as O’Leary said, we’ll look worse off in the coming months. It seems almost inevitable with the terrible handling of the economy by Biden to see a downgrade but nonetheless, one that no citizen ever wanted to see.