Moody's Investors Service on Wednesday warned that its top credit rating for the United States could be in jeopardy if lawmakers backtrack on $1.2 trillion in deficit cuts planned over 10 years.
The ratings firm said the failure of a U.S. congressional committee to reach an agreement on deficit reduction did not affect the Aaa rating, but any pullback from agreed automatic cuts to take effect starting in 2013 could prompt it to take action.
"While a change in the composition of the spending cuts would not be a major rating consideration, a reduction in the total amount that would increase the projected increase in federal debt over the coming decade could have negative rating implications," Moody's said in a statement.
Read the rest at The Huffington Post (Reuters article)
Someone wake up the bond vigilantes and tell them that Moodys is concerned.
Hello, yields are hitting historical lows.
I sure hope the folks at the rating agencies don't trade bonds. Or maybe they do and are sowing disinformation. Pathetic. Looks like they are spending so much time over at Zero Hedge they are unable to distinguish reality anymore.
this is the definition of the tail wagging the dog. Our government should put this a-holes in their place once and for all.
ReplyDeleteGood Lord, what does the Department of Justice do every day, seriously?
ReplyDeleteMaybe President Rick Perry should merge it into the Small Business Administration or something. That Standard & Poor's is still in operation is grounds for Eric Holder's impeachment for dereliction of duty.
Before going to federal criminal code, remember that the US Constitution has only one exception to the right to Free Speech:
"The validity of the public debt of the United States... shall not be questioned.
"In summary, those activities which courts have held defraud the United States under 18 U.S.C. § 371 affect the government in at least one of three ways: They cheat the government out of money or property; They interfere or obstruct legitimate Government activity; or They make wrongful use of a governmental instrumentality"
http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm00923.htm
Widespread institutional ignorance combined with arrogance.
ReplyDeleteToday's Krugman blog entry is vamping on what Mike Norman has been vamping on since even before 2007.
ReplyDeleteNamely the single entry accounting fiberoo most deficit terrorists are on, and also how th RReal economy is depending on the virtual government economy.
If Krugman is so honky "wonkish" as he usually says some of his "graphed" writings are - then why doesn't he just embrace the top 10 tennants of MMT and get on with it and show people how it works.
Namely that private investment and savings is a function of government spending.
What was that formula ?
or the NYtimes can just let Mike and Warren have an op ed.
So, let me get this straight. Cuts are enacted because the debt to gdp ratio is too high. Gdp figures are revised downwards. Doesn't this make the debt/gdp ratio higher not lower? Am I missing something?
ReplyDeleteRight, they are only looking at the numerator and ignoring the denominator.
ReplyDeleteThe economic objective in recovery is to increase the denominator and decreasing the numerator is counterproductive.
Obviously, the rating agencies are either incredibly stupid or not interested in recovery, since there is no credible transmission mechanism that gets from reducing the numerator to increasing the denominator.
It's magical thinking. These people must believe in fairies.
Oh no Muddy's downgrading the USA. Now our home loan interest will drop below 3% what will we do?
ReplyDelete