"Extend Bush Tax Cuts, Face Downgrade" Says Moody's Analyst, then Retracts It

[Toro]

Moody's must have gotten a call from Timmy Geithner.

Today’s sudden spike in yields across the curve is being widely attributed to a conversation between Moody’s Steven Hess, Senior Credit Officer covering sovereigns, and Market News, in which Moody’s has given the point blank warning that a permanent extension in the Bush tax cuts may lead to a downgrade of the US

Treasury yields spike

Moody’s Says “Permanent Extension Of Bush Tax Cuts Would Be Negative For US Sovereign Debt Rating”, Spooks Treasurys

But, oh oh, someone comes a-callin'!

Moody’s Investors Service Inc. said a permanent extension of the tax cuts first enacted under former President George W. Bush won’t lead to a downgrade of the nation’s credit rating.

“We have a Aaa outlook for the U.S. that is stable and we are not contemplating changing anything anytime soon, that is the bottom line,” Steven Hess, senior credit officer at Moody’s in New York, said in an interview today. An Aaa rating is the highest credit rating Moody’s gives and signals “minimal credit risk,” according to the New York-based company’s website.

Treasuries and stocks slid earlier after reports that Moody’s said a permanent extension of Bush’s tax cuts would have a negative implication for the U.S. sovereign debt rating.

“A permanent extension of the tax cuts without doing something to offset it would make it more difficult to avoid the continual upward trend in the deficit,” Hess said. “There are many facets to the country’s credit rating,” and any ratings action would result only if a spiraling, unaddressed deficit that took place “over the next decade.”

Moody’s Says Extension of Tax Cuts Won’t Lead to U.S Downgrade - BusinessWeek

 

[Sallow]

What is the big deal over these tax cuts. They have been extremely destructive. Anyone with a brain can see that.

 

[loosecannon]

The big deal is that austerity has replaced wild abandon across most of the world and the exception is the US.

If we extend the tax cuts we will almost certainly be technically insolvent forever. It is only a matter of when we default on our bonds, not if.

And the world is pissed because we caused the current financial crisis almost alone. And we continue to treat our debt like it was a mirage. As if we will never have to repay it.

 

[Revere]

There are no tax cuts, they are merely extensions of the same rates on the books for years.

If there is a lack of austerity, it's a budget baseline that has increased 24% in two years.

The currency markets are taking a shit because of what the Fed is doing.

 

[Revere]

The world is slashing its runaway government spending...except for the US, that is.

 

[loosecannon]

There are no tax cuts, they are merely extensions of the same rates on the books for years.

If there is a lack of austerity, it's a budget baseline that has increased 24% in two years.

The currency markets are taking a shit because of what the Fed is doing.

You are full of shit.

 

[Revere]

Nobody's taxes are being cut.

Quit bastardizing the language.

 

[loosecannon]

Nobody's taxes are being cut.

Quit bastardizing the language.

But we are discussing whether an existing temporary tax cut will be extended.

Grow a brain and stop arguing sheer stupidity.