"US Still AAA." - Moody's

[Toro]

FWIW

Characteristics that support the Aaa rating and that formed the basis of our decision to confirm the rating include the following:

1. The unparalleled diversity and size of the U.S. economy and its long record of relatively solid economic growth, based on both demographics and productivity. Even if the short-term economic outlook exhibits some weakness, we believe that the long term remains favorable in relation to many other advanced economies. This provides a solid base for government finance.

2. The global role of the dollar, which underpins continued demand for U.S. dollar assets, including U.S. Treasury obligations. This feature, unique to the U.S., provides unmatched access to financing, meaning that the U.S. government can support higher debt levels than other governments. Thus, while comparisons of government debt ratios form an important part of our rating analysis, the status of the dollar and the U.S. government debt market need to be taken into account when making such comparisons. Over time, the dollar’s role may be eroded, but we see no immediate threat.

3. Relative to other large Aaa-rated governments, the U.S. debt position is somewhat high, but not out of line with the positions of these countries. While the projected trend of U.S. government debt is less favorable without further deficit reduction measures, we believe that eventually such measures will be adopted. The less favorable debt ratio trend now in place is reflected in the negative outlook assigned to the rating.

4. A step in the right direction toward deficit reduction was taken on 2 August with the passage of the Budget Control Act, even if by itself it will not produce all of the deficit reduction measures necessary to reverse the debt trajectory. Although the political process has been considerably more contentious than usual in the past few months, it finally did produce an agreement. We expect further fiscal measures over time, albeit with vigorous debate over the particulars.

Moody's: Why the U.S. Is Still AAA - NYTimes.com

 

[8537]

Perhaps having one downgrade us gives us the benefit of a wakeup call without the harsh consequences of an across-the-board downgrade - but judging from the selections for the 12 person reduction panel, I suspect that the wakeup call wasn't heard in congress.

 

[geauxtohell]

I am having a hard time with S&P's rational. Granted, I am not an economist, but first they made an error (admittedly) and then indicated they downgraded us based on the climate in Washington while claiming that this was in no way politically motivated.

It seems very subjective. Moody's seems more objective. Then again, I don't want to pick and choose. However, since 2/3 still rate us as AAA why is everyone harping over the downgrade? Is S&P the Gold Standard for credit rating or something?

 

[L.K.Eder]

I am having a hard time with S&P's rational. Granted, I am not an economist, but first they made an error (admittedly) and then indicated they downgraded us based on the climate in Washington while claiming that this was in no way politically motivated.

It seems very subjective. Moody's seems more objective. Then again, I don't want to pick and choose. However, since 2/3 still rate us as AAA why is everyone harping over the downgrade? Is S&P the Gold Standard for credit rating or something?

i guess it is seen as the first crack in the wall.

 

[ScienceRocks]

Honestly why does moody's believe that we're AAA?

 

[Avorysuds]

We need a real leader.

 

[geauxtohell]

Honestly why does moody's believe that we're AAA?

They laid out their rationale if you read the intro post.

 

[Kevin_Kennedy]

Well anyone who questions S&P's rating based on the fact that they missed the 2008 collapse has to do the same with Moody's since they missed it as well. The truth is that the U.S. is not a AAA country, and it's not even a AA+ country. Does anyone honestly believe we'll pay our $14 trillion debt without resorting to printing money? Not going to happen.