16 March 2010

Holy Crap! U.S. Bond Rating To Be Downgraded

The irresponsibility and wanton spending that has resulted in this humiliation is just astonishing. This should be huge news. With a lower bond rating, it will be more expensive to borrow money, costing us billions more in the future. Heads need to roll in D.C.

Bloomberg: U.S., U.K. Move Closer to Losing Rating, Moody’s Says

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.

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.

“We expect the situation to further deteriorate in terms of the key ratings metrics before they start stabilizing,” Cailleteau said. “This story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics.”

The U.S. government will spend about 7 percent of its revenue servicing debt in 2010 and almost 11 percent in 2013, according to the baseline scenario of moderate economic recovery, fiscal adjustments in line with government plans and a gradual increase in interest rates, Moody’s said.

Under its adverse scenario, which assumes 0.5 percent lower growth each year, less fiscal adjustment and a stronger interest-rate shock, the U.S. will be paying about 15 percent of revenue in interest payments, more than the 14 percent limit that would lead to a downgrade to AA, Moody’s said.

Hey didn't Geithner promise that the U.S. bond rating would not be downgraded?

Oops, it looks like he did. From 7Feb10 ABC News: Geithner: U.S. Will Not Lose AAA Bond Rating

Oh, and he was at it again today! Sec. Geithner: 'Not a chance' U.S. will lose AAA bond rating
But Geithner, appearing at a House Appropriations Committee hearing, expressed confidence that both parties and the administration would work together to find a plan for fiscal solvency.
Now there's a laugh. The two political parties that caused this mess are the ones that will not act responsibly? And working together? Bipartisanship?

Hey, Geithner, maybe you haven't been keeping up with current events, but "post-partisan" is getting it's ass kicked! It's game over, man! Game over!

Updated and bumped to top.

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