Moody's Confirms US Triple-A Rating, Assigns Negative Outlook (More Debt Is Okay?)

CNBC ^ | 08/02/2011 | Reuters

[Rational Thought]

Moody's Investors Service on Tuesday confirmed its triple-A rating of the United States, citing the decision to raise the debt limit, but kept the pressure on the government to move toward a long-term fiscal consolidation plan.

The ratings agency affirmed the United States' triple-A rating after congressional lawmakers agreed to raise the country's debt ceiling , which will allow the Treasury to keep servicing U.S. debt obligations.

It assigned a negative outlook on the rating, however, in a sign that a downgrade is still possible in the next 12 to 18 months.

In a statement, Moody's said there would be a risk of a downgrade if "(1) There is a weakening in fiscal discipline in the coming year; (2) If further fiscal consolidation measures are not adopted in 2013; (3) If the economic outlook deteriorates significantly; or (4) There is an appreciable rise in the US government's funding costs over and above what is currently expected."

[Rational Thought]

Translation.....As long as Obama is President, we won't make a move.

Sorry. I shouldn't draw assumptions like that. It's probably that Moody's likes the idea of a huge US debt increasing even more (which I saw earlier has already quietly occurred today in the amount of $1 Trillion). Yea, I'm sure that's it.

[mountainlion]

Is Moody’s rating tainted by stimulus money and in conflict of interest?

[tarheelswamprat]

Moody’s just playin their part in the kabuki play...

[molson209]

Didn’t Obama have people talk to Moody’s last week , Barney Franks comes to mind

[Rockingham]

US government political influence and institutional strength are no doubt part of the reason for the continued AAA rating. Assigning a negative outlook though indicates that a downgrade is coming — probably after the election year.

[Taggart_D]

Usually a credit rating is based on your ability to pay. Isn't it funny how a credit card company, when your up to your eye balls in debt, will still send you a credit card?

If the Tea Party doesn't take control of the white house in 2012, the America we grew up in will be over.

[Rational Thought]

That caught my eye as well.... a downgrade is still possible in the next 12 to 18 months

I'm sure the timing is just a coincidence (sarcasm).

[muawiyah]

Moody's rates bonds and other securities ~ it does not rate the world's only super power. They just talk that way to make themselves feel superior.

Same with S&P, and all the other rating services.

For the most part they are simply columns in what amount to business magazines.

Here, let me turn myself into a rating service ~ for magazines. "The outlook continues to be poor for magazines nationwide although there are signs that developing nations can serve as an expanding market for controlled tabloid formats."

You might want to counsel your purchase of a subscription to magazines based on that advice ~ or not ~ but the risk is yours. Not licensed in Wisconsin.

[Rockingham]

For major borrowers, ratings agencies tend to follow the market. Before there is a ratings downgrade, interest rates and the price of credit insurance in the market signal declining credit strength. That is already happening with US Treasuries.

[mountainlion]

I could use some cheap magazines for an AR15./s

[ken21]

bump.

[familyop]

Large numbers of bond investors are listening to Moody’s and will soon show Moody’s ratings to lack any relevance.