credit rating downgrade- Money Morning - Only the News You Can Profit From.
- By Diane Alter, Contributing Writer, Money Morning
- January 15, 2013
David Riley, managing director of the leading credit ratings firm said Tuesday that he is concerned about an impending credit crisis and cautioned that failure to raise the debt ceiling by March 1 will activate a formal review of the nation's coveted AAA rating.
"The pressure on the U.S. rating, if anything, is increasing," Riley said during a conference in London. "We thought the 2011 crisis was a one-off event... if we have a repeat we will place the U.S. rating under review."
Fitch presently maintains a "negative" outlook on the United States, and plans to decide this year if a downgrade is warranted.
A Toothless Debt Deal Won’t Stop a U.S. Credit-Rating Downgrade – Or the Aftermath that Follows
- By Jason Simpkins, Managing Editor, Money Morning
- August 2, 2011
It's often said that the sign of a good compromise is that both parties walk away dissatisfied - but that's not necessarily true of the debt deal Congress is close to passing.
To be sure, both parties are dissatisfied with the outcome of this contentious battle. Progressive Democrats are disappointed that planned cuts to government spending won't be augmented with tax increases, while fiscally conservative Republicans are angry that the cuts to spending haven't gone far enough.
But the truth is, regardless of their party allegiances, all Americans should be disappointed in their policymakers for the same exact reason: After months of political kabuki theater, the debt deal that's working its way through Congress is toothless, ineffectual and will do little or nothing to prevent a crushing blow to the markets and the dollar.
The facts of the debt deal are as follows:
- The deal raises the debt ceiling by $900 billion to $17.7 trillion.
- It cuts spending by $917 billion over the next decade and a special congressional committee will be assigned to find another $1.5 trillion in deficit savings by late November.
- If Congress comes up with the savings, or passes a balanced-budget amendment to the constitution, the government will accrue another $1.5 trillion boost the debt ceiling - sufficient to pay the country's bills through 2013.
- If Congress fails, the president will be granted a $1.2 trillion debt-ceiling extension - but automatic, government-wide spending cuts (half of which will come from the defense budget) will take effect in 2013. There will be no automatic tax increases.
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U.S. Government Faces Credit Rating Downgrade Without Radical Budget Changes
- By Kerri Shannon, Associate Editor, Money Morning
- April 27, 2011
Could the United States lose its status as the world's premier safe harbor for global investors?
Credit-rating heavyweight Standard & Poor's last week threatened to cut the United States' top-tier credit rating, saying the country's political infighting and burgeoning debt may warrant a downgrade.
In short: This country's days as a AAA-rated investment may be numbered.