2nd Warning from Moody’s: US May Lose Aaa Rating
LONDON: The UK Pound declined against the dollar today after the market digested Moody’s warning about a possible downgrade of the country’s credit rating. “Britain and the U.S. had ‘resilient’ Aaa ratings, as opposed to the ‘resistant’ top ratings on Canada, Germany and France, Moody’s said in a report today,” according to Bloomberg.
Credit-rating agency Moody’s Investor Services on Tuesday warned that the United States and Great Britain may test the limits of their AAA sovereign ratings due to deteriorating public finances.
“These are the AAA countries whose public finances are deteriorating considerably and may therefore test the Aaa boundaries,” wrote Pierre Cailleteau, managing director of Moody’s sovereign risk group…
Britain’s deficit is expected to top 12% of gross domestic product this year, while the U.S. budget gap is forecast to touch 10%.
Britain’s gross debt to GDP ratio is forecast to rise to 69% at the end of 2009 from 47% in 2007. The ratio of U.S. debt to GDP rose to 53.5% from 40.2% a year earlier, Moody’s noted. William L Watts, Marketwatch
This is the second time the NIP has brought this to our readers’ attention, the first was on October 23rd. Moody’s this time is even more specific regarding the conditions that are now pressuring the possible credit downgrade:
Moody’s Investors Service says the U.S. and U.K. must prove they can whittle down their ballooning deficits to avoid threats to their triple-A credit ratings…
Under the most pessimistic scenario put forward by Moody’s, the U.S. would lose its top rating in 2013 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.
Unlike several years ago, “now the question of a potential downgrade of the U.S. is not inconceivable,” says Pierre Cailleteau, chief international economist at Moody’s. Joanna Slater, Wall Street Journal
Other developments in credit markets today:
- Moody’s downgrades Illinois debt ratings
- Moody’s downgrades Dubai companies
- Swedish banks risk further downgrades
- Greece Rating Cut, Yen Extends Gains, Dubai Loss Deters Risk
- Mexico’s peso suffers biggest tumble in 2 months
Banks, states, and countries are all in danger of having their credit ratings downgraded, some for the second or third time. What has put the US in unprecedented danger? “Ballooning deficits.”
How has Congress and the President responded? Today President Obama announced his intention to expand the debt even further. Harry Reid is pressuring the Senate to pass the most massive spending increase in the country’s history. No sane leaders would pursue such a course unless they had ulterior motives.
The NIP’s position remains that this course of action has two primary drivers. First it is payback to George Soros who stands to make a fortune on the impending collapse of the dollar. More importantly, the resulting destruction of our economy will initiate a crisis which will enable the left to seize permanent control and subvert the constitutional basis upon which this country is founded. This is all about redistribution of wealth. Barack Hussein Obama is doing exactly what he promised: radically transforming America. Congress is helping him, are you?