Posted on 06/02/2011 7:33:52 PM PDT by MinorityRepublican
The treasury department has taken steps to avoid further borrowing pending the debt limit increase
Moody's has warned it may downgrade the US debt rating if Congress fails to increase the US debt limit in the coming weeks and risks default.
The agency warned of political "entrenchment" preventing an increase.
Republicans on Wednesday blocked a bill to raise the debt limit, demanding Democrats first agree to spending cuts.
The US risks default if Congress does not authorise more borrowing by August. A downgrade would increase borrowing costs, slowing the economic recovery.
The US runs a $1.5tr (£916.8bn) deficit and is already about $14.3tr in debt.
The country reached its debt ceiling last month, but the US treasury department has begun taking extraordinary measures to avoid breaching the limit. Flurry of negotiations
Leaders of both parties agree to the need to trim the budget in the face of massive budget overruns, but Republicans have refused to allow tax increases, while Democrats have vowed to protect costly social programmes.
The White House argues the United States would face "catastrophic" consequences if Congress does not raise the cap on total US government borrowing by 2 August.
Republicans and Democrats have engaged in a flurry of negotiations led by Vice-President Joseph Biden, but on Thursday no solution seemed imminent.
And US President Barack Obama, who has called for Congress to raise the debt limit without conditions, has held meetings with congressional leaders of both parties.
(Excerpt) Read more at bbc.co.uk ...
The BBC seemed to leave out the part where Moody’s said that even if we do raise the debt limit, the U.S. might be downgraded anyway if we don’t stop spending money.
I guess refusing to borrow more money, when deeply in debt, somehow makes one a larger credit risk to existing creditors.
The only responsible thing to do when you’re in debt to your eyeballs and spending like a drunken sailer is to... borrow more and keep spending like crazy.
Does this mean that messiah in chief Oaf-bama will be making a “friendly” phone call to Raymond McDaniel? Hmmmmm ...
More than a billion a day in interest already. How can getting off the cocaine be bad for recovery?
I just finished reading The Big Short - about Wall St. investors who saw the crash coming and shorted the housing market.
Part of the book described the type of people who get hired at the ratings agencies - it is not a complimentary description.
Great book! I read it twice...
Damn, these sum b&*ches are in on it.
and just who does MOODY’S favour when the whole damn world is in hock........
“This Moody’s?? Bad Credit: How S&P, Moody’s and Fitch Helped Cause the Housing Bubble”
Hmmmm...well, they seem to have displayed a sudden return of interest in...DOING THEIR JOB.
yes - despite his liberal leanings and lack of curiosity in the role of Fannie/Freddie - I could NOT put that one down!
Big, bipartisan government won’t shrink that easily. The debt ceiling will be raised all too soon, and more QE in the blink of an eye. The alternative would be joblessness for the relatives of many in both political parties.
“The US risks default if Congress does not authorise more borrowing by August.”
What a lie ! “Default” happens only when the interest on the EXISTING debt is not paid. It has nothing to do with agreeing to borrow more money.
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