Moody's sounds alarm over U.S. debt limit and deficits (On the heels of S&P outlook downgrade)

Reuters ^ | 06/03/2011 | By Daniel Bases and Donna Smith

[SeekAndFind]

Ratings agency Moody's warned on Thursday it would consider cutting the United States' coveted top-notch credit rating if the White House and Congress do not make progress by mid-July in talks to raise the debt limit.

Treasury Secretary Timothy Geithner, seeking to convince Congress to increase his borrowing authority and prevent a government default, went to Capitol Hill to press his case in a 45-minute meeting with first-term lawmakers.

"I am confident that two things are going to happen this summer," Geithner told reporters after the meeting. "One is that we are going to avoid a default crisis and we are going to reach agreement on a long-term fiscal plan."

The meeting occurred just hours after Moody's Investors warned that slow-moving deficit talks led by Vice President Joe Biden, hindered by entrenched positions on both sides, had increased the odds of a short-lived default by Washington.

Moody's warning increases pressure on President Barack Obama and House of Representatives Speaker John Boehner, the top Republican in the U.S. Congress, to strike a deal soon or risk upsetting global financial markets.

Geithner has predicted a financial catastrophe if Congress fails to increase the current $14.3 trillion borrowing cap by August 2, when his department will exhaust the extraordinary cash management measures it has been using since reaching the debt limit on May 16.

Geithner said he had a "good meeting" with the first-term lawmakers, but some of the skeptical Republicans, who oppose increasing the debt limit without implementing deep spending cuts, were less pleased.

"It is frustrating when the secretary talks in circles and that is very unfortunate," said Representative Stephen Lee Fincher. "We are all big boys and girls. We need a framework put forward and we are not seeing that out of this administration, only seeing talk, talk and talk."

[DownInFlames]

God help us. Can anyone provide a link or documentation of what would really happen when the US goes into default.

[ClearCase_guy]

The Democrats haven't been able to put together a budget for two years now.

These are not serious people. They do not deserve to borrow money at decent rates.

[cripplecreek]

Seems pretty ass backwards to me.

We’ll downgrade your credit rating if you don’t go deeper into debt.

[Lurker]

This is what Reuters says that Moody’s says. Remember that. Reuters reporters are barely competent to string a proper sentence together, let alone tear into a complex written document written in Accountantese.

[edcoil]

Moody should be closed down and it’s officers in jail. They were the ones rating mortgage bonds as “A” while people defaulting the mortgages.

[Opinionated Blowhard]

Seems pretty ass backwards to me. We’ll downgrade your credit rating if you don’t go deeper into debt.

You have that right. One would think that evidence that America is finally trying to stop its out of control spending would be a good thing. One would think that Moody's should have been warning about a downgrade when Congress was increasing spending by insane levels from 2006 through 2010. But no, the downgrade warnings come now when we try to stop the insane spending.

[BobP]

"It is frustrating when the secretary talks in circles and that is very unfortunate," said Representative Stephen Lee Fincher.

--------------------------

So Jackwagon Obama never created or saved any green shoots, even the ones the the piss-stream media harped about?

All I know is that if they tell us we had 1.8% growth, it really means we had no growth or negative growth.

It's all fiat money now, meaning that it has value only because the Fed says it does! So we have an unstable economy wobbling atop unsound money. Money that the government takes from taxpayers, or borrows with no intention of paying it back, or prints without end. For every dollar our government spends, they have to borrow 40 cents.

First comes financial crisis; then comes sovereign debt crisis; then comes financial repression (where government looks for ways to force institutions to hold their bonds. Banks are forced to hold government bonds, for 'liquidity' and pension funds are forced to hold government bonds, for 'safety'). Then comes bailing the banks out all over again.

They have spent $4.1 trillion dollars this year. We have 140 million people who actually work out of 310 million US citizens. Divide $4 trillion by 140 million working Americans. It's $30,000 a piece. The average wage of the American worker is $43,460 a year. Congress has spent 75 percent of your paycheck already this year. But they let Helicopter Ben print $70 billion of funny money every month to buy this debt.

The debt bomb has already gone off! We are just waiting for the shockwave to reach our house! No shelter and no place to go...

Barry can't figure out what went wrong
The people aren't singing his song
Well, here is the gist
The people are p...ed
And we'll vote him out before long

[paul51]

borrow more money or we will lower your credit rating. Typical thinking

[paul51]

borrow more money or we will lower your credit rating. Typical thinking

[sportutegrl]

Last nite on Fox the talking heads were saying that we would probably get Bohner’s increase = spending cuts plan. (Where the debt limit is increased the same dollar amount as spending cuts.) Kraut said this was a good thing. But, cuts in what, exactly? We don’t have a budget. How can they say they cut two trillion out of the budget when we don’t have a budget? What is the imaginary number before it is cut?

[familyop]

Lessons from Argentina's economic collapse
by FerFal
http://www.silverbearcafe.com/private/10.08/tshtf1.html

This is an older version that I found a few years ago (not as well formatted), and it's been around longer than that (possibly posted earlier at the Frugal Squirrels site).
http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2079&Itemid=2

Remember that our culture is somewhat different, and so are some of our circumstances. For one, our USD is the world reserve currency, and that government and globalists will try even much harder to keep the paradigm going longer on debt. Concurrently, some nations are building nuclear weapons forces (including Iran's missiles in Venezuela) and are far more likely to launch than Russia was during the Cold War. China also now has mobiles that can reach any part of the USA will great accuracy. China wants to own more ocean routes and wants consolidation of Oriental countries (racial superiority perception there). The SCO (includes China, Russia and several Russian neighbors) told our US government to get out of Asia several years ago.

And there's much more but not enough space or time here.

[upchuck]

From the article (and, yes, the source left off the closing quote mark):

"This report makes clear that if we let this opportunity pass without real deficit reduction, America's financial standing will be at risk," said Boehner. "A credible agreement means the spending cuts must exceed the debt limit increase.

I sure hope Boehner has gotten some education. Last time he did this nobama played him like a fiddle and, IIRC, hundreds of millions in cuts wound up being just 30-something million once the reality chainsaw got finished.

[familyop]

So we can be certain that as soon as the congressional dog and pony show over special interest group money allocation is concluded (probably very soon), the debt ceiling will be raised. And the next QE measure will begin. Lots of free money to continue paying government employees, other funding to special interests continuation of the debt regime in general.

Commodities, inflation, the dollar continuing down and oil continuing up (no mythical China crash for over four years now).