Posted on 01/02/2013 6:30:31 AM PST by Perdogg
From SocGen:
The scaled-down deal passed in the Senate addressed the fiscal cliff but did nothing to address longer term fiscal health of the nation. This puts the US rating at risk for a downgrade. However, credit rating agencies may decide to wait and see what emerges from the subsequent talks. There is an implicit new cliff at the end of February related to the sequester and to the expected exhaustion of extraordinary measures related to the debt ceiling. This date is expected to be used by Republicans as leverage for spending cuts. President Obama has already signaled that a new round of spending cuts – those related to the sequester as well as entitlement spending – will have to be matched by additional revenue increases. Therefore entitlement and tax reform are likely to be at the center of discussions over the next two months.
And recall from Moody's in September:
Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government's Aaa rating and negative outlook, says Moody's Investors Service in the report "Update of the Outlook for the US Government Debt Rating."
If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable, says Moody's.
If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1.
Moody's views the maintenance of the Aaa with a negative outlook into 2014 as unlikely. The only scenario that would likely lead to its temporary maintenance would be if the method adopted to achieve debt stabilization involved a large, immediate fiscal shock—such as would occur if the so-called "fiscal cliff" actually materialized—which could lead to instability. Moody's would then need evidence that the economy could rebound from the shock before it would consider returning to a stable outlook.
Moody's notes that it is difficult to predict when during 2013 Congress will conclude negotiations that result in a budget package. The Aaa rating, with its negative outlook, is likely to be maintained until the outcome of those negotiations becomes clear.
The rating outlook also assumes a relatively orderly process for the increase in the statutory debt limit, says Moody's. The debt limit will likely be reached around the end of this year, and the government's ability to meet interest and other expenses out of available resources would likely be exhausted within a few months after the limit is reached.
Under these circumstances, the government's rating would likely be placed under review after the debt limit is reached but several weeks before the exhaustion of the Treasury's resources. Moody's took a similar action during the summer of 2011.
Several weeks before the exhaustion of Treasury's resources is.... now.
For those still confused, nothing has changed on the US long-term sustainability picture. In fact, as the CBO announced yesterday, deficits will rise by $4 trillion (so really $10 trillion) over the next decade. But the music is playing and one must dance....
No longer matters.
CW-II is a certainty, and citizens are properly arming and awaiting the next step of our incompetent, thieving pieces of Obamastuff currently infesting Washington.
What goes around is most certainly coming around.
Their legacy will be the enslavement of our children and grandchildren.
It will hit while most of us are still alive.
Republicans? What Republicans? We have only Marxists and Marxists lite. The Tree of Liberty is badly in need of watering.
Nobody is lending us money anyway if I understand it, so the credit rating argument is moot point, therefore Turbo Tax Tim is just running the presses ... you should consider buying gold, silver and some cooper too,
“New round of spending cuts”? What spendng cuts?
Nobody is lending us money anyway if I understand it, so the credit rating argument is a moot point, therefore Turbo Tax Tim is just running the presses ... you should consider buying gold, silver and some cooper too,
We can blame the politicians all day long, but this is what the American people want. It’s what they vote for every time. Just mention a spending cut that affects people in any congressman’s district, and you will get an earful about how important that particular project or program is. This is true even of the the supposedly hard-core conservatives. People want their pork!
As Walter Williams said, how far do you think a politician would get if he told people on the campaign trail that he was not going to bring home any bacon to his constituents?
The only way to stop this would be to find a way to stop government from giving money away, and that is unlikely. It seems we are destined to become Greece.
BUSH’S FAULT !!!
HEIL OBAMA !!! \s
I really disagree with this statement. Globalists have been trying to take over the USA for a couple centuries. George Soros and other globalists have been manipulating public opinion go get their way. The UN wants to rule us also. The fed is manipulating things to enslave us. Corruption is at its height so you really can not blame the American people.
u mean? Jeff Cooper?
Our rotten economy now belongs to the marxist fool that clueless Americans allowed to remain in the White Hut for another four years.
The republicans whose backbone hasn’t been surgically removed and Conservatives need to hang it around his scrawny neck as well as around the necks of the other Democrat scumbags. The US enterd the Obama recession last year and it will be, in short order, the Democrat depression.
The rating for America will drop dramatically and we’ll not only be first in the percentage of corporate taxes levied, but dead last (counting civilized non-African nations) in sound economy and happy campers.
ouch me spel good
What negotiations? There will not be any negotiations until 3 days before they vote on the Debt limit and the Republicans cave in again forcing Obama the Dictator to just raise it anyway.
Until the world realizes the US Dollar isn't worth the paper it's not printed on and starts pricing oil in some other currency, which we then have to attempt to buy using perceived-as-worthless dollars.
If you want a dress-rehearsal of that, take some Monopoly money down to your local gas station and try to buy some gasoline with it.
very few people in this Idiocracy are paying attention.
As my own sister said, unless it hits her, she doesn’t care. Wonderful philosophy these dems have..
OR, the evil party got drunk with the stupid party, slept together and the next day America found out it was knocked up.
OR, the evil party got drunk with the stupid party, slept together and the next day America found out it was knocked up.
We got knocked up
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.