Moody’s in Mood to Downgrade?

Moody’s in Mood to Downgrade?

John W. Lillpop

While the Obama Administration and Congressional liberals paint analysts at Standards and Poors as simple-math challenged fumblers, S&P may soon have company when it comes to downgrading US credit.

As reported at the reference in part:

Ratings agency Moody's repeated a warning on Monday it could downgrade the United States before 2013 if the fiscal or economic outlook weakens significantly, but said it saw the potential for a new debt agreement in Washington to cut the budget deficit before then.

"For the Aaa rating to remain in place, we would look for further measures that would result in the ratio of federal government debt to GDP, for example, peaking not far above the projected 2012 level of near 75 percent by the middle of the decade and then declining over the longer term," Moody's analyst Steven Hess wrote in a report.

"Last week's agreement suggests that coming to an agreement that would meet this criterion by early 2013 will be challenging, given the political polarization, but not necessarily impossible."

Moody's said the United States "continues to exhibit the characteristics compatible with a Aaa rating" despite the expected further deterioration in the government's debt metrics in the next few years.

"Over time, this status could be threatened if further measures to address the long-term fiscal situation are not adopted, but it is early to conclude that such measures will not be forthcoming," Hess said.”

Based on this statement, Obama and his party need to set aside their obsession with downgrading S&P and focus instead on cutting spending in a serious fashion!