Moody's Issues Credit Warning to U.S. Amid Political Wrangling Over Debt Limit

Leading investment agency Moody's warned the U.S. government Thursday that its sterling credit rating could be downgraded in the next few weeks if there is no progress in Washington on reaching a deal to increase the nation's borrowing limit.

Moody's Investor's Service said it would place the government's Aaa rating under review for a possible downgrade due to the "very small but rising risk" of a short-lived default if the White House and Republican leaders can't agree on raising the nation's debt ceiling, which has already hit $14.3 trillion.

Moody's announcement followed the lead set by S&P, which announced in April that it was downgrading the U.S. credit outlook to negative over the nation's mounting debt.

The news was just the latest sign of the massive financial problems facing the nation as the economy's recovery sputters. It also gave Republicans fresh ammunition to use against President Obama, whose 2012 re-election hopes likely hinge on how many Americans can find work in the next year.

"Today's announcement from Moody's simply reinforces the position already announced by S&P and a clear bipartisan majority in the House of Representatives," said Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee. "House Republicans have put forward bold solutions to deal with this crisis and it is time for the president to come to the table and join us in talking about specific policy solutions."

"This report makes clear that if we let this opportunity pass without real deficit reduction, America’s financial standing will be at risk. A credible agreement means the spending cuts must exceed the debt limit increase. The White House needs to get serious right now about dealing with our deficit and debt," added House Speaker John Boehner.

The Moody's announcement comes on a wave of bad economic news that has surfaced this week: home prices hit their lowest level in nine years; jobless claims remain stuck at a level that signals weak job growth; manufacturing grew at the slowest pace in 20 months and businesses sharply cut spending in April on computers, machinery and other long-last goods.

The monthly jobs report due Friday is expected to fall way short of expectations. Taken together, the data show the recovery is in serious jeopardy.

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The problem is that politicians are not willing to propose harsh austerity measures sufficient with paying down the mounting debt. Sure austerity is not the only measure for paying down the debt, but politicians seem unwilling to make budget cuts elsewhere such as military or foreign aid. I guess the easy way out for the time being will be to raise the debt ceiling yet again. Will be interesting to see how this pans out over the next month or so.

reply to post by surrealist




OR.......... they could just stop spending, stay within their budget, and then this wouldn't be a problem.

When the rest of us run out of money, we just stop spending!! It is not that difficult of a concept!

Worse yet, now we are letting Moody's impact legislation with their threats? So the Congress and Administration answers to Moody's? They are supposed to respond to this threat or else?

I mean, we already knew that the Banking Cartel was running things, but public threats are a new development.

What is next, Goldman-Sachs publishing their political agenda in the NYT? Either meet our demands or we will crash the stock market?

Speaking of Goldman Sachs.....

Goldman Sachs subpoenaed for financial crisis role

(Reuters) - New York prosecutors have asked Goldman Sachs to explain its behavior in the run-up to the financial crisis, the latest investigation that has cast a pall over the reputation of the largest U.S. investment bank.

www.reuters.com...



Only took what, three or so years to finally subpoena this lot? I guess there were a lot of legal hoops to jump through and get around.

Hey I agree with you, and I guess both Dems and Repubs would probably also agree but it seems that it is not a matter of cutting spending per se, but where those cuts will be coming from that is in dispute. A lot of spending is tied to social programs and assistance which affects a large constituency base and won't help come 2012 elections. Sure the Repubs are tough on their stance now but I wonder if they would be so much if they were in government. Anyway, I think a lot of cuts can be made without sending your poorer populations into the abyss.

Moody's Threat of US Downgrade Departure from S&P's Warning

Compare and contrast the downgrade threats from Moody's Investor Services today with Standard & Poor's warning back in April and you'll see Moody's cites the debt ceiling fight in Washington, whereas S&P assiduously does not.

Why do I bring that up? Because it underlines the politically charged nature of a downgrade threat, which is bearish for the U.S. dollar. Citing the debt-ceiling fight puts pressure on DC negotiators to hammer out a deal. S&P was more sanguine that a deal would be reached, but it is more worried there is no credible plan to tackle the $14 trillion in debt, which is more than the entire Eurozone and is more than China and Japan combined.

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It also gave Republicans fresh ammunition to use against President Obama, whose 2012 re-election hopes likely hinge on how many Americans can find work in the next year. "Today's announcement from Moody's simply reinforces the position already announced by S&P and a clear bipartisan majority in the House of Representatives," said Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee. "House Republicans have put forward bold solutions to deal with this crisis and it is time for the president to come to the table and join us in talking about specific policy solutions."

Politics....always politics!

We have a serious issue at hand and the bickering continues, with only a few looking to solve the problem without a care to party or platform. As said before, we need to cut spending in many areas and start downsizing our over-burdensome government overhead.

Until we can talk without politics as a motivator we will never see any results and a raise in the debt ceiling only delays the inevitable!

U.S. Offers Foreign Aid to Countries Holding Billions in Treasury Securities

The United States is providing hundreds of millions of dollars of foreign aid to countries that it borrows billions from, according to a report by Congress's research arm.

The Congressional Research Services released a report last month, a copy of which Fox News exclusively obtained, showing that in fiscal year 2010, the latest year that data was available, the U.S. handed out a total of $1.4 billion to 16 foreign countries that held at least $10 billion in Treasury securities, including China ($27.2 million), Brazil ($25 million), Russia ($71.5 million), India ($126.6 million), Mexico ($316.7 million) and Egypt ($255.7 million).

China is the largest holder of U.S. Treasury bonds with $1.1 trillion as of March, according to the Treasury Department. Brazil held $193.5 billion, Russia had $127.8 billion, India owned $39.8 billion, Mexico held $28.1 billion and Egypt had $15.3 billion.

Read more: www.foxnews.com...

Now in light of a potential downgrade, this news would have to get up any sane person's nose. The US continues to offer finanical aid to the countries the US is indebted to, and it is the debt, of which these countries are also profiting from, that is sending the US into a financial crisis. Head spins at the absurdity.