US Triple-A rating could be downgraded by 2013 says Moody"s

[American Horse]

In a report released on Tuesday, the US was called merely "resilient" rather than "resistant,"

Resistant is a label which it still applies to Canada, France and Germany, where public finances are in better shape than the US

They released the report because of investor demand to examine the creditworthiness of the US and the UK. Under the most pessimistic case the US would lose its AAA rating in 2013.

To avoid that happening, the investor’s service says the U.S. as well as the U.K. must prove they can whittle down their ballooning deficits to avoid those threats to their present rating.

The downgrade will result “if economic growth proves anemic, interest rates rise and the government fails to dent the deficit or recover most of its assistance to the financial sector.”

- Moody’s noted that in a situation of moderate growth and deficit reduction—the path it considers most likely —"the trajectory of the debt metrics, while unfavorable in the near term, does not currently threaten the ratings" of countries like the U.S. and the U.K. –

So far what recent actions or proposals by our government make them believe any of that will actually happen?

Moody's plans to update the report, called its "AAA Sovereign Monitor," every quarter

Moody's Puts U.S., U.K. on Chopping Block - WSJ.com

 

[Mike458877]

In other words, the Obama White House has just been warned, the path they are on will cost us the AAA rating!

Gee, I wonder if he will get it?

Mike

 

[uscitizen]

Moodys , the same outfit that rated junk mortgage packages as low risk?

And why should we believe them?

 

[American Horse]

Moodys , the same outfit that rated junk mortgage packages as low risk?

And why should we believe them?

THE most predictable response to any problem of substance is the ad-hominem attack

 

[uscitizen]

Moodys , the same outfit that rated junk mortgage packages as low risk?

And why should we believe them?

THE most predictable response to any problem of substance is the ad-hominem attack

so you are saying that my response if of no concern or value?
Those ratings agencies are largely responsible for the finiancial meltdown.
If the "packages" had been rated according to their risk factor there would have been no problem. Or at worst a minor one compared to what we experienced.

 

[American Horse]

Granted there was a failure and there were even charges of conflict of interest. It appears they were influenced by political as well as economic expediency.

But what would be their conflict of interest in reporting problems with US economic and fiscal policy that everyone including the Chinese can see? Isn't it likely that, even if we discount the accuracy of their ratings back then, that now institutional investors will be influenced unfavorably towards the US because of its being labeled "resilient" rather than "resistant"? Germany, Canada, and France are seen to be more reliable in that scenario.

That is just the first red flag; what happens with investors if the US loses its AAA rating in 2013, especially looking backwards? Everything the administration is now doing is reminiscent of the causes of the Crisis of late last year.

Rating agencies like Moody’s were stung by the sub-prime derivative debacle. It appears they don't intend to be stung again, so they're laying their reputation on the line.

 

[Modbert]

Rating agencies like Moody’s were stung by the sub-prime derivative debacle. It appears they don't intend to be stung again, so they're laying their reputation on the line.

When people like you continue to flock to them even after this, it's proof that their reputation is not on the line.

What I think needs to be noted is this:

Under the most pessimistic case the US would lose its AAA rating in 2013.

Literally, every single thing would have to go wrong, and then every single that goes wrong has to go worse.