Monday, March 15, 2010

Moody’s - US Substantially Closer to Losing AAA Credit Rating

Out of control deficit spending is having a very predicable result; our credit worthiness is moving toward a downgrade. Such a nightmare scenario could send ripples through the global economy as US Treasuries are seen as the benchmark of safety. If our credit rating drops, the interest we will be forced to pay to borrow money increases creating a negative spiral that could put us on course for the first time in our nations history to either default or hyper-inflate our way out of debt. We are not there yet, and still have the time and ability to change course and avert disaster. The prescription is fairly simple and straightforward as well; stop deficit spending in trillions plus per year.

"The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody’s Investors Service.

The governments of the two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly, Pierre Cailleteau, managing director of sovereign risk at Moody’s in London, said in a telephone interview.

Under the ratings company’s so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013, Moody’s said today in a report.

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