Moody's Warns of Watch List For US If Debt Ceiling Isn't Raised

[Kathianne]

http://blogs.forbes.com/steveschaefer/2011/06/02/moodys-wags-finger-at-washington-over-debt-ceiling/


...Moody’s said that if U.S. lawmakers do not make progress on raising the debt ceiling, it “expects to place the US government’s rating under review for possible downgrade, due to the very small but rising risk of a short-lived default.”

Raising the ceiling would preserve the Aaa rating, but the outlook could be altered due to longer-term debt concerns, Moody’s said, noting that without a fiscal consolidation plan over the coming weeks the likelihood of progress before the 2012 election is slim.

According to Moody’s the implications of the jawboning in Washington are:

...

[red states rule]

http://blogs.forbes.com/steveschaefer/2011/06/02/moodys-wags-finger-at-washington-over-debt-ceiling/

Damn, you beat me by ONE minute Kat

My question is how will the US default? Taxes will still be collected so the interest payments wil be amde

Scare tactic in support of Obama perhaps?

[Kathianne]

Damn, you beat me by ONE minute Kat

My question is how will the US default? Taxes will still be collected so the interest payments wil be amde

Scare tactic in support of Obama perhaps?

I think the rest of the world is getting a bit tired of the uncertainty of what is happening here. There's no good news on any front, other than a bit with exports. The dollar is taking a beating.

I did note a few minutes ago that the markets seem to like this.

[avatar4321]

The fact is the Debt Cieling has to be raised, as much as i dont like it we are too late at preventing it without major problems. But that doesn't mean we shouldn't condition the raising on serious spending cuts.

[red states rule]

The fact is the Debt Cieling has to be raised, as much as i dont like it we are too late at preventing it without major problems. But that doesn't mean we shouldn't condition the raising on serious spending cuts.

I want the Republicans to offer a budget with NO deficit and that would senf a good message to our creditors we are serious abiout cutting spending

Then we can watch the Dems and Obama explain the voters that unlike them the government can continue to live on borrowed money

Again, can anyone explain that if the interest payments are made how wil the US go into default?

[DragonStryk72]

I want the Republicans to offer a budget with NO deficit and that would senf a good message to our creditors we are serious abiout cutting spending

Then we can watch the Dems and Obama explain the voters that unlike them the government can continue to live on borrowed money

Again, can anyone explain that if the interest payments are made how wil the US go into default?

Well, basically, it won't for a bit, not until we're much farther behind. We'll make it for now, but automatically funding cuts would start happening due the lack of credit to pay for things, likely with the most easily lost periphery programs, and working its way up the chain.

We have to start paying more than the interest rate, even an extra 1-2% of the balance would start pulling us ahead a little bit. then take the excess money that slowly opens up and roll it back into the deficit. It'll build as we pay down more, as opposed to going with a fixed payoff amount.

Okay, so we owe $14,000,000,000,000. 8% of that is 1,120,000,000,000 That's what keeps it at the current mark, so if you switch up to paying down 10%, or 1,400,000,000,000, then we pull ahead by $280,000,000,000. Now, the next year we only owe $13,720,000,000,000, 8% of which is $1,097,600,000,000, you do your 10% 1,372,000,000,000 or $274,400,000,000 ahead plus the extra $280,000,000,000 from the lower deficit, to pay it down to $12,068,000,000,000 in year two. Repeat as needed until we're in the clear. In just two years, the would be two trillion cut off the national debt, which a payment system in place to pay it off in less than ten years.

[red states rule]

Well, basically, it won't for a bit, not until we're much farther behind. We'll make it for now, but automatically funding cuts would start happening due the lack of credit to pay for things, likely with the most easily lost periphery programs, and working its way up the chain.

We have to start paying more than the interest rate, even an extra 1-2% of the balance would start pulling us ahead a little bit. then take the excess money that slowly opens up and roll it back into the deficit. It'll build as we pay down more, as opposed to going with a fixed payoff amount.

Okay, so we owe $14,000,000,000,000. 8% of that is 1,120,000,000,000 That's what keeps it at the current mark, so if you switch up to paying down 10%, or 1,400,000,000,000, then we pull ahead by $280,000,000,000. Now, the next year we only owe $13,720,000,000,000, 8% of which is $1,097,600,000,000, you do your 10% 1,372,000,000,000 or $274,400,000,000 ahead plus the extra $280,000,000,000 from the lower deficit, to pay it down to $12,068,000,000,000 in year two. Repeat as needed until we're in the clear. In just two years, the would be two trillion cut off the national debt, which a payment system in place to pay it off in less than ten years.

So he government will NOT default and all the doom and gloom crap coming from the White House is just that. Crap

Correct?

[Kathianne]

I gotta say I too wondered if Moody's was being pressured by the administration on debt ceiling. If so, seems it's not working out real well:

http://finance.yahoo.com/blogs/breakout/markets-hammered-without-deficit-reduction-economist-183600992.html


Markets Will Get Hammered in 2012 Without Deficit Reduction: Economist
By Matt Nesto

The two largest U.S. rating agencies and the nation's top economists are all sounding the alarm over our out-of-control national debt and the possibility of losing the coveted AAA credit rating -- something that was unthinkable prior to this year.

Standard & Poor's warned us in April, Moody's warned us this week, and more than 150 economists warned us in a letter sent to the Speaker of the House John Boehner. If we don't see some meaningful deficit reduction, the market will react, according to new Friend of Breakout Nariman Behravesh, chief economist at IHS.

"If you just raise the debt ceiling and do nothing else, that really lacks credibility," he says. We're nearing a breaking point and must "use this opportunity to make some meaningful deficit reduction."

As it stands, the nation's $14.3 trillion debt is growing by about $1 trillion due to the fact that annual expenditures exceed income by about 30%. If lawmakers don't make significant progress by mid July -- just weeks ahead of a threatened Aug. 2 default date -- then the two ratings agencies have said they will be forced to act.

"Things have to change," Nariman adds. "Markets aren't going to be patient."

For the record, the U.S. is one of only 19 countries in the world that has the top-rated AAA rating alongside the likes of Germany, France, the U.K. and Canada. Even though it is still intact, never in our long national history has it even come under review before. But economists say this time it's different, and they're right.

"If we don't do it willingly, we'll be forced into something. We really have a small window to act," Behravesh says...

[Missileman]

I'm still waiting for someone to explain how going further into debt is going to help our debt situation. It's time to cut the spending, period.

[red states rule]

I'm still waiting for someone to explain how going further into debt is going to help our debt situation. It's time to cut the spending, period.

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[Kathianne]

I'm still waiting for someone to explain how going further into debt is going to help our debt situation. It's time to cut the spending, period.

Raising the debt ceiling isn't raising spending or debt per se. It's like you have credit limit of 10k, but you've been allowed to charge 11.5k. Either your limit must be raised or you are going to pay much higher interest on the 1.5k over. The question is to me, why do you deserve a higher limit? Has your income increased? Are you spending in areas that have some long term pay off? I think those are the issues that need to be addressed. We know government income has fallen, with the economic downturn and unemployment. Less taxes, more outgo.