Posted on 07/20/2011 11:41:54 AM PDT by 2ndDivisionVet
A backup plan to raise the U.S. debt ceiling and avoid default could still lead to a negative outlook on the country's ratings, Moody's said, highlighting the plan's failure to substantially reduce the deficit.
The back-up plan offered by Senator Mitch McConnell would avoid any immediate downgrade of the coveted U.S. triple-A rating, Moody's analyst Steven Hess told Reuters in an interview, bringing relief to investors who fear an imminent downgrade of the coveted U.S. triple-A rating.
"But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don't seem to be very large," Hess said. "Therefore, this plan might result in a negative outlook on the rating."
A negative outlook is a sign the rating may be downgraded in 12 to 18 months.
McConnell's plan, which is being negotiated with Senate Majority Leader Harry Reid, would include about $1.5 trillion in deficit-reduction measures.
Hess said a "much larger amount" of deficit-reduction measures would be necessary for Moody's to affirm U.S. ratings with a stable outlook.
In the most recent development in Washington on Tuesday, President Barack Obama supported efforts by a bipartisan group of U.S. senators with a more ambitious budget plan that includes $3.75 trillion in savings over 10 years.....
(Excerpt) Read more at moneynews.com ...
LOL!!!!!
If they consider the US govt’s ability to service the debt, they’re screwed.
Prepare accordingly.
Masters of the Obvious! And what would substantially reduce the deficit?
This story says its based on a Reuters story. Here’s the only Reuters story with an interview with Hess. How could MoneyNews write that story based on this?
Moody’s suggests U.S. eliminate debt ceiling
http://www.reuters.com/article/2011/07/18/us-usa-debt-moodys-idUSTRE76H0WH20110718
Let's just repeat that for good measure....
What a laugh riot. Moody’s pulls the legs from underneath McConnell and Obama at the same time.
Rush Limbaugh brought this up a few days ago.
It pays to investigate sources now more than ever, and who they are affiliated with. Especially big name entities. The bucks generally speak louder than words and whose coffers they fill.
More than once I’ve been surprised...these big boys have tenticles all over the map....so it pays to track them.
Correct
How Moody's sold its ratings - and sold out investors
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON -- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.
A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.
Instead, Moody's promoted executives who headed its "structured finance"
division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now:
"toxic assets."
As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren't fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.
The Securities and Exchange Commission issued a blistering report on how profit motives had undermined the integrity of ratings at Moody's and its main competitors, Fitch Ratings and Standard & Poor's, in July 2008, but the full extent of Moody's internal strife never has been publicly revealed.
WOW!....that’s quite the read about ‘Moody’s.....
...So they’ve been taking (bribes) for ratings. I’m not surprised as so many agencies at all levels ‘Pay to Play’. Interesting ‘Warren Buffet’ had his hands in this as well.
Just another agency rolling in the dough....and to think they fired people for wanting to do the right thing!
” Instead, Moody’s promoted executives who headed its “structured finance”
division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now:
“toxic assets.”
I didn’t know Moody’s was involved in this . They have no cred as far as I’m conserned.
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