US backup debt plan doesn't support rating - Moody's

(Reuters) – A U.S. government backup debt plan to raise the country's debt ceiling and avoid imminent default could still lead to a downgrade of U.S. ratings in the next year or so, Moody's said on Tuesday.

"But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don't seem to be very large," Hess said. "Therefore this plan might result in a negative outlook on the rating."

US backup debt plan doesn't support rating - Moody's

Now Moody’s assessment has aligned with Standard and Poor on the US debt situation that a mere agreement to raising the debt ceiling is no longer enough!

No more political game of chicken and compromise at the last minute. Major rating agencies are beginning to call for significant cuts to the US budget in order to stabilise its debt problem or be faced with a downgrade. The impact of a downgrade on the US credit rating is another issue, I read some saying it can have major adverse affect on investor confidence and as such cause borrowing costs to rise sharply, while others state it may not have any significant impact. Regardless, the US is now faced with getting its spending under control which to date has only done minimal to contain its deficit, while the debt itself is and will at this rate continue to grow. Increased borrowing costs on its growing debt together with a contracting GDP is a crisis in the making.

to add insult to injury. For every percent the Interest rate goes up, you can add 100 Billion dollars to interest on debt cost to the national debt annually.

Seems to parallel the panic of 1837.

Panic of 1837

The currency was failing so banks decided to not accept the funny money anymore. Only gold and silver were used as currency. Do you see the trend of gold lately? Even if people are just being speculative its going to cause some damage by hoarding it.

Or maybe that's the plan. The rich truly get richer while the poor sap (me) works harder for less.

Edit. The similarities become even more unreal when you read about Martin Van Buren.
Martin Van Buren
He took the helm right at the start of the panic. People loved him but slowly realized he wasn't the solution to the problem. This could be a parallel to Obama or maybe Ron Paul. We'll have to let this play out and see what happens, something has to happen.