With no accord on US debt limit, Moody’s could downgrade US ratings
Moody's has warned it may downgrade the US debt rating if Congress fails to increase the US debt limit in the coming weeks and risks default. The agency warned of political “entrenchment” preventing an increase.
Republicans on Wednesday blocked a bill to raise the debt limit, demanding Democrats first agree to spending cuts.
The US risks default if Congress does not authorise more borrowing by August. A downgrade would increase borrowing costs, slowing the economic recovery. The US runs a 1.5 trillion US dollars deficit and is already about 14.3tr in debt.
The country reached its debt ceiling last month, but the US treasury department has begun taking extraordinary measures to avoid breaching the limit.
Leaders of both parties agree to the need to trim the budget in the face of massive budget overruns, but Republicans have refused to allow tax increases, while Democrats have vowed to protect costly social programs.
The White House argues the United States would face “catastrophic” consequences if Congress does not raise the cap on total US government borrowing by 2 August.
Republicans and Democrats have engaged in a flurry of negotiations led by Vice-President Joseph Biden and President Barack Obama, who has called for Congress to raise the debt limit without conditions, has held meetings with congressional leaders of both parties.
On Thursday US Treasury Secretary Timothy Geithner held a meeting at the US Capitol with Republicans, including many newly elected congressmen who have indicated they see little risk to a showdown.
In a statement this week, Moody's warned that if Congress does not act to increase borrowing authority in the coming weeks, it could downgrade the AAA rating on US government debt “due to the very small but rising risk of a short-lived default”.
Such a move would increase borrowing costs, hindering the already struggling economic recovery.
“The rating outlook will depend on the outcome of negotiations on deficit reduction,” the agency said, in what analysts interpreted as a criticism of both parties.
“A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody's to change its outlook to negative on the AAA rating.”
The agency said it had anticipated “political wrangling” on the debt increase but noted “the heightened polarization over the debt limit has increased the odds of a short-lived default”.
Moody's move took Washington by surprise, even though in April, ratings agency Standard & Poor’s warned it could cut its credit rating on US government debt over concern Democrats and Republicans would not be able to agree a plan to reduce the growing deficit.
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This is not fair. At least can we hold the title until the end of 2011?
youtu.be/PTUY16CkS-k
Ha Ha Ha
Amazing this video!
: )
US gross Federal debts, % nominal GDP [ 95,52 % ] ( Feb 2011)/(*)
(*) interesting ... [31% ] of it intragovernmental debts !!
The System in insolvent !
This is the rule of nature not my !
False, it's higher, of course you won't read that from US government that has seperate accounting books.
outstanding debt is above US$ 80 trillion (with unfunded liabilities like social security, medicare, medicaid and other social welfare systems)
It's a joke to type that the US is a Capitalist nation.
Will the US pay off its debt? Never, they cant.
solution, deflate their currency (what is bad for the people in the US and for foreigners that hold dollars)
For example real unemployment is higher than 19 % but the media only report 9.1%. Which is the U-3
But they split unemployment into 6 categories fromU-1 to U-6.
Those who don’t fall into the U1 categorisation are considered persons marginally attached as who currently are neither working nor looking for work but they want and are available for a job. Long term unemployment or structural unemployment never appears on the news.
The official figures for 2010 (last years) were:
U1: 5.7% while U6: 16.7% of course a lie because was higher.
Unemployment Statistics Bureau of Labor Statistics
www.bls.gov/lau/stalt10q4.htm
(US) market debts outstanding by sectors /December/2010
Households ...... 13358 billions $
Business ...... 11087 billions $
State & Local Governments ...... 2464 billions $
Federal Government .... 9385 billions $
Domestic Financial Sector .... 14236 billions $
Foreign Financial Sector ..... 2104 billions $
TOTAL = 36295 billions $
[Social Security.....debts = 2346 billions $]
this is one more interesting and more reliable.
www.shadowstats.com/
Yul, unfunded liabilities mean, the bill has yet to come. I'm sure you understand it's higher than what you typed.
Thanks I 'm watching now the M1 messy graphic ha ha
www.shadowstats.com/imgs/sgs-m3.gif?hl=ad&t=1307228017
Seem they were so busy printing green notes. ha ha
: )
unfunded accounts could be considered while “ income statements ”
analysis .......these are simple just “” debt “” accounts !
i know J.Williams' “” shadow stats “” but his some alternate accounts
are not true ...becouse some continuums can not have smooth latitute
this does not mean that all officials indicators are true everytime !
Yul, again unfundes accounts are funds that yet have to be funded because they don't know the real costs..all what government has is what they “think” what they will pay, and reality has shown many times that they are wrong. the alternate accounts, what you have no clue about, is what the goverment doesn't show. Yul, you need live here to understand how the US government really works.
An example of that could be the future cost on health care, state workers pension for future pensioners, veteran of war pensions, etc.
A govt. knows that has to cover this but have not at the moment the real amount of the bill because this will happen in the near future.
Like your electricity, gas, etc. bills you know that you will have to pay but you can only make an estimation to cover these liabilities.
USA has not even a financial plan to cover these issues in the future but the commitments were already made.
The sword of Damocles hanging above the head USA.
: )
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