Moody’s expects to cut US rating without deal to lower debt/GDP ratio

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  • Budget negotiations likely to determine AAA rating and outlook
  • If budget talks do not produce downward trend in debt-to-GDP ratio, rating likely to be lowered to AA1
  • Assumes “relatively orderly” process for increasing debt limit
  • The full Moody’s statement is here

For whoever wins the election, getting the votes from the public will be the easy part. Getting the votes in Congress will be painful.

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

2012-09-11T12:48:39+0000

All|Americas|Market Rumors|Regions

Adam Button

243 Comments

  1. Obama’s Top Priority

    http://vimeo.com/14503514

  2. Here are some important fiscal realities Moody’s foresees:
    http://m.cnbc.com/us_news/48985074/1
    Including the following:
    Such a shock could come if Congress (and the President at that time so you better HOPE that we do CHANGE to Romney/Ryan) allows a slate of temporary tax cuts to expire as planned at year-end. Automatic spending cuts would also be triggered.
    The Congressional Budget Office said such an outcome could shrink U.S. GDP by 2.9 percent in the first half of next year.
    In such a case, the CBO director said, Americans should expect a “significant recession” and the loss of some two million jobs.

  3. Cut America’s rating! Let the economy crumble to the ground and the government collapse just like the soviet union did! America needs a government that serves the people like the present one once did!!!

  4. Paige
    just wonderful

  5. Just cut it now so we can add that to all those Obama tax increases hitting the US next year.

  6. You’re mistaken if you think Romney is the answer. The Republicans have proven they’re just as addicted to debt as the dems. Debt and a new world currency is the goal of our one-party system. If you think otherwise you’re delusional.

  7. Not to worry. Obumma gonna get you paid.

  8. Why is it only the Republican Congress who is blamed by the lib media? The President never LEADS on these issues. He is a wimp.

  9. Government spending is out of control and one way people can help solve the problem is stop cashing their Social Security checks and using Medicare to go to the doctor and hospital.
    Save America now!

    Please forward this to all your friends and help save America now.
    r

  10. “Should ignorant people be allowed to vote?”

    Had to laugh when I saw that posted. Do you mean stupid, or just uninformed? How about well informed but rather stupid? How about brilliant but bigoted? How about you spend some time pondering how utterly unworkable this concept is?

  11. @Greg: Really, Greg? “Lib (sic) media”? You really buy into that silly canard? Fox News. The Washington Times. The Wall Street Journal. I could go on, but generally these conversations don’t end well. :)

  12. Yet, the gop refuse to act and want to give us our second downgrade.

    Vote out the worthless gop.

  13. These rating agencies rate long after the obvious is apparent. Obama the down grade president will care little if Moody’s adds to the down grade chorus. If Obama is reelected that is all that will matter to him that is his single goal right now. His four year history is of five plus trillion of more debt and no entitlement or spending reforms at all. His agenda is not the economy but a societal and social re-engineering of America. Prepare yourself for a sad new world.

  14. If you want a job, do you go to a businessman or a community organizer?

  15. i think ubahma ist great! He has saved unamerica. Maybe the world will elect him to save the world next? But seriously folks, you better buy guns instead of butter. In the end you will have something of value – bullets!

  16. This is what “hope and change” got us. A nice sentiment, but absolutely no plan. Obama has never managed anything of consequence in his life. He has been a failure as president when it comes to the most important issue; the economy.
    How anyone with even a small amounts of brains would vote for this empty suit is beyond all belief.

  17. not for long , need a lot of practice :)

  18. Keep up the great work obama, sure glad you’re on our side!
    buckethead…
    cant wait until youre gone…

  19. can’t we just print more Obama Money?

  20. American economy collapses. Military rule put in place to distribute essential food and medicine. Travel blockades put in place to manage transportation of critical and black market goods. Permanent detention centers set up to manage dissenters. Free communication established to all – but heavily monitored and filtered.

    Think this is too far off? What’s to stop it? We’ve already given so much power to one particular branch of gov’t. I don’t see how this CAN’T happen.

  21. Heck with a moodys downgrade, why is SP taking so long to drop the rating again? I mean they dropped it last year and nothing has changed. We aren’t paying down debt. It’s about time for yet another downgrade from the S&P.

  22. gung
    you would think

  23. Are we better off than we were 4 years ago?

  24. The Terrorists said they would ruin us financially and they are, thanks to their Middle Eastern Bro.

  25. I love your blog.. very nice colors & theme.
    Did you create this website yourself or did
    you hire someone to do it for you? Plz reply as I’m looking to construct my own blog and would like to find out where u got this from. thanks

  26. oil
    you’re going to have ask Jamie on that one

  27. Hear this fellow countrymen as we read this news report about Moody’s saying we are facing another downgrade in our credit rating our Congress is preparing to raise the debt ceiling yet again.

  28. The fiat currency system is DEAD! WAKE UP!!!

    The three ways to return wealth to the people of this world is to get rid of the federal reserve, BIS, IMF, central banks(same greedy _astards), prevent the government from borrowing and let the treasury issue our own currency.
    Returning to the gold standard will only result in the continuation of our fractional banking (cartel) if we keep the same _astards in office.

    It’s time for a REVOLUTION…Gun sales are up…Live or die free….

  29. @shell, it’s the Jerk-offs in Washington that are ruining the country can’t you understand that Truth.

  30. Like S&P before them, expect Moody’s to be “investigated” after this announcement.

  31. Its ok don’t worry… the American Idol – on the government dole crowd will re-elect Obama…. his plan is working…record number of Americans on food stamps and SS disability

    The socialist needs only about 4 more years to collapse the system by spending America into oblivion and then the government can take over completely…. “Never let a Crisis go to Waste”

    Hope and Change… not sure about the “hope” part but brother, America is in for a big change! …

    See the movie 2016

  32. What’s Moodys waiting for? We all know the collapse is coming. Go ahead and cut the rating and do it before the election.

  33. The present rating for the Unites States should be CCC minus.

    I gave up on these rating agencies as they lag instead of being predictive.

  34. This the same Moodys rating company that said Bundled sub prime mortgages
    were great investment ? They were a major factor with that misguided statement to the mess we are in !! They are a for profit co. and should have no influence on anyone credit ! In my opinion they should have been proscuted to full extent of the law , but then ho much did they make on “SWAPS “

  35. You lefties have to be kidding me (oh your not). Moody’s have been very tolerant and waited much longer then other credit agencies to drop the rating. Heck you ask me Moody’s leans left by waiting so long. It’s apparent this administration does not care about debt at all.

  36. Instead of eliminating programs for the young and the old, why not eliminate some of the really flagrant money wasters, like tax breaks for corporations with obscene profits, medical marijuana prosecutions, Obama Care(which the Republicans denigrate with their mouths, but as rich as it will make the corporations who already feed on us, it is the usual double speak). Stop our war-mongering. Stop supporting Israel’s war mongering. I guess it is too late to make the banks and Wall Street accountable for their role in this mess, but putting some of the regulations back in place that made those ***holes accountable back in the day might help keep us solvent in the future. Those vultures have sucked us dry…but they keep circling the carcass thinking that they might be able to get just a little bit more. This downgrading of our credit worthiness is nothing less than what the our government has made possible. Those we have put in office have the power to change things, but they like being rich and richer on we the people. I’m going with a third party this time. Neither the Donkey nor the Elephant deserves my vote.

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  38. stop buying GMO foods from the supermarkets… stop taking vaccines and flu shots…. the American and European Government are SICK EVIL WAR CRIMINALS who inject toxic chemicals and poisons into our food supply

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  41. thanks Maude

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