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Fitch to review US rating if no debt ceiling deal

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posted on Jun, 8 2011 @ 06:00 PM
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Fitch Ratings says it might downgrade U.S. debt if lawmakers fail to increase the nation's borrowing limit before the government runs out of money in August.

The rating agency, based in New York, said Wednesday that it will put the debt on watch for a possible downgrade if lawmakers have not reached a deal by Aug. 2. That's the date by which the Treasury Department will have exhausted stopgap measures it is using to delay a default.

Fitch expects the debt ceiling to be increased. If that doesn't happen, the nation might default, implying "a crisis of governance" and threatening the stability of the world financial system, the rating agency said.

"Default by the world's largest borrower and issuer of the pre-eminent reserve currency would be extraordinary and threaten the still fragile financial stability in the U.S. and the world as a whole, especially against the backdrop of the European sovereign debt crisis," said David Riley, head of Sovereign Ratings at Fitch, in a statement.

A lower credit rating could spread through the economy, increasing the cost of borrowing for consumers and businesses That's because many loans, including mortgages, tend to follow yields on U.S. Treasury bonds. If investors demand higher yields to offset the increased risk associated with Treasury debt, rates for other loans would rise, as well.

If borrowing and spending decrease sharply, the sluggish economic recovery could run out of steam.


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So a possible downgrade by Aug 2? Isn't that a little late? But I guess you can't call it early as a deal could be made only days out and the whole 'kick the can down the road' starts again. A number of these rating agencies seem to err on the side of conservative until such time it is too late. I understand this was happening in 07-08 as well.




posted on Jun, 8 2011 @ 06:20 PM
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Raise your debt limet or we will downgrade you.... so take on more debt so we can be worse off next year when we have to do it again. This is crazy



posted on Jun, 8 2011 @ 06:39 PM
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Moody's said 2 weeks ago that if the US didn't stop taking on so much debt, they would downgrade from Aaa rating. However, now they are saying the same thing as Fitch... Now they are demanding the US to increase the debt ceiling.

So which is it, oh credit lords?

In the end this is all smoke and mirrors and politics. Is there anybody out there that truly believes our "reps" in DC won't raise the debt limit?



posted on Jun, 8 2011 @ 07:02 PM
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reply to post by METACOMET
 


Yeah they likely will, but the Reps are sucking this situation for all they can politically as the election approaches.



posted on Jun, 8 2011 @ 11:47 PM
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I wonder who or whom they are trying to fool. Raise the debt and your toast. Fail to raise the debt your toast, either way the game is over. The US will financially burn in the sight of a hour and everyone will wonder what happened. Some will say; "but I thought we raised the debt", thinking that it kept the problem at bay for the time being. Others will say; "we knew this was coming but we thought we had a little more time". I doubt that there will be a down grade before the bottom falls out of the US financial crisis. Its like walking over a very large pit that is covered with a rotten cloth. You will not know when you will take a step and fall to the bottom of the pit.



posted on Jun, 8 2011 @ 11:51 PM
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Do the right thing and put everything to junk status.

Because it really is.

But since they are a joke... they will only ``review it`` and whatever the republicans come up with as a ``plan to reduce the deficit`` will be accepted as ``good`` and no downgrade will take place.
edit on 8-6-2011 by Vitchilo because: (no reason given)



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