Posted on 10/23/2009 4:34:28 AM PDT by expat_panama
Moody’s (NYSE:MCO) lead analyst covering US debt said that the Amercan goverment could lose its “AAA” rating if it cannot cut the deficit and budget gaps in the next three to four years.
Steven Hess told Reuters: “The Aaa rating of the U.S. is not guaranteed.” The current rating should be stable for at least 18 months.
It was only earlier this year that the UK government got a similar warning from credit agencies.
China expressed concern to Secretary Geithner that it does not have an unending appetite for US Treasury paper. At some point the People’s Republic will not be willing to risk a larger part of its $2 trillion reserves on debt that it believes has some risk, albeit a small one, of defaulting.
One thing that is nearly certain is the the US government will end up paying much higher interest rates for its debt as it needs to fund its own interest payments starts to join the need to fund the principal. There is also that very real risk that American debt will begin to crowd private debt out of the global capital markets, raising interest costs for all borrowers.
Both Ben Bernanke and Geithner have said that the deficit must come down, but government spending and stimulus costs are actually rising. Only yesterday, the Administration suggested a new program to help small businesses. With growing unemployment, it is unlikely the IRS receipts will rise.
The Moody’s comments may not mean much for three years, but they could start to roil the capital markets much sooner.
I heard them talking about this months ago. Maybe its getting closer?
I have a $25.00 Series E Bond. Should I cash it in? Oh. What to do!
US bonds have been AAA since Moody's began rating them back in 1917, and nothing --not the Depression, the wars-- nothing has tarnished the AAA rating. Yet. That's when I googled the story and saw how this canard shows up every year or so and never gets anywhere.
Never mind.
You beat me to it (re post 4)
Moody’s, the guys who lied about MBS ratings? Still waiting for the prosecutions (but I ain’t holding my breath).
People that say their dollars are worthless trash are only saying it to con guys like me into hauling away their trash.
Can you?
Reports of the US treasury's credit weakness are decidedly exaggerated. All the world's doom mongers screaming it in chorus won't make a lick of it true.
“We’ll give you 3 or 4 years to get your act straight...”
I would think it will only take 4-6 more months, the way Barry, Nancy and Harry are running the country down.
The only reason that Moody’s gives the US Gov the AAA is because unlike any other entity, the US Gov can print all the money it wants to pay any debt.
The O administration will be sending a horses head to the CEO of Moody’s.
They’re a corrupt rating organization anyway so this ought to be interesting.
US bonds have been AAA since Moody's began rating them back in 1917, and nothing --not the Depression, the wars-- nothing has tarnished the AAA rating. Yet.
Yet you're dumb enough to think that unchecked deficit spending will never hurt that rating...
OR... you actually want to financially weaken our nation and think this news is a huge joke and reason to celebrate.
Either way, you have $hit for brains.
Our foolish government did this....sorry we cant press charges for racketeering and embezlement.
This is a good argument against zero deficits. The reasoning is that if we want things like the US military, border patrol, FBI, etc., then we have to pay for them. We can all borrow the money individually at 10%, or we tell our hired help to borrow at 3.5%.
Either way, it's nonsense now just like it's always been.
Sobriety and judgment are conservative virtues. Hysteria is a radical's vice.
"let's use it for stuff we actually need..."
You didn't mean it that way; there's no 'but' here. We need revenue for what's important and we want limits to spending.
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