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Moody’s Warns for Fourth Time: US Credit at Risk

Alfred E. Neuman, "What, Me Worry?"

What, Me Worry?

WASHINGTON: Today Moody’s warned the US of an impending credit downgrade due to the country’s worsening debt situation.

Moody’s Investors Service warned that lack of U.S. government action on the budget deficit increases the likelihood of a negative outlook on the country’s top AAA credit rating.

The Moody’s report, which came hours after a downgrade of Japan by Standard & Poor’s and an IMF warning on growing budget deficits in both countries, reiterated previous comments made by the agency late last year.

Moody’s had said in December that the extension of Bush-era tax cuts would add to the likelihood of a negative outlook on the U.S. rating in the next two years.

Lower debt ratings typically push up a country’s borrowing costs. A negative outlook makes a rating downgrade more likely in the next 12 to 18 months. MoneyNews.com

The NIP has written multiple times regarding previous warnings from Moody’s. The US Ignoring Moody’s is similar to a homeowner ignoring calls from their mortgage banker. Eventually credit ratings our downgraded, interest rates go up and penalties are instituted.

We are seeing the result already. During Chinese President Hu Jintao’s visit to the US Obama hosted an unprecedented state dinner for the president of a country that has one of the worst human rights abuse record. How long until the Chinese demand higher interest rates to cover our increasingly worthless dollar?

This is just the beginning of the pain that awaits as our Congress and President blithely spend us into oblivion.

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