Moody's: Small But Rising Risk Of Short-Lived U.S. Default

Moody's Investors Service said on Thursday there is a very small but rising risk of a short-lived default by the United States if there is no increase in the statutory debt limit in coming weeks.

In a statement, Moody's said it would put the Aaa U.S. rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.

"Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely," Moody's said.

The ratings agency, whose announcement follows a similar warning from Standard & Poor's earlier this year, said if the debt limit is raised and default avoided, the Aaa rating will be maintained. Still, the rating outlook will depend on the outcome of debt talks in Washington, Moody's said.

"Moody's downgrade adds pressure on Congressional leaders to work hard at reaching an agreement to increase the debt ceiling," said Kathy Lien, director of currency research at GFT Forex in New York.

If a downgrade were to occur, Moody's said it would put the U.S. credit in the Aa range.

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Hysterian68]

02:22 PM on 06/03/2011

Tea Baggers are ignorant bridge trolls with serious mental incapaciti­es. My question is, why do Republican­s who aren't members of the Tea Party movement (all ten of them) even remain in the GOP?

[ironchefjay2]

12:33 AM on 06/03/2011

Who died and left Moody's in charge? It is the credit system in this nation that got us into trouble because there is nothing backing it up and nobody knows how it works........hence you have voo doo economics. Maybe these credit rating companies need to close and their people need to get real jobs rather than handing out what amounts to be arbitrary numbers to everyone.

[VoteThemAllOut]

11:16 PM on 06/02/2011

Have to ask - has any other administration ever pushed the country into this position?

[robbyr2]

12:01 AM on 06/03/2011

Say what? The problem is the Bush tax cuts and the wars Bush started. That and the efforts of the current administration to boost the economy (like Bush did to the tune of $300 billion in 2008).

[joni brit]

12:11 AM on 06/03/2011

$$300 billion is peanuts compared to what is being pledged now. It's like monopoly money, and the Government owns Park Place, Boardwalk and every railroad in between. The game is no fun anymore, because the American people have no chance of winning.

[Mudge]

12:05 AM on 06/03/2011

Thats the wrong question. Has any other Congress pushed the nation to the brink of default?
Ask the Boehner.

[VoteThemAllOut]

12:26 PM on 06/03/2011

Your point that it is the Congress that can authorize an increase in the National Debt is well taken. The problem is that the administration is unwilling to cut spending funds it doesn't have to spend. Just look at Obama's proposed budget that was shown to be so flawed that the CBO stated that the deficit was understated by $1.5 trillion.

If Obama and Reid will not admit that the uncontrolled spending cannot continue, I'm glad the House is.

[dadw5boys]

11:11 PM on 06/02/2011

This amounts to TREASON in my mind.

Republicans are pulling out all the stops.

Moody's should be ashamed after thier CORRUPT actions in the Housing Bubble !!!

[joni brit]

11:56 PM on 06/02/2011

Do we need Moody's to tell us America is not a good investment? Would you loan money to this Government so they can bail out Bank fraud again? Who is guaranteeing the guarantee? Wow!! The US Government. I don't care what Moody's says, I ain't investing!!!!!

[joni brit]

12:07 AM on 06/03/2011

Shame doesn't last too long when you are walking all the way to the Bank, making deposit after deposit after deposit.....money talks, and it doesn't say,
Boo Hoo, I'm so ashamed!"
You have to watch "Too Big To Fail" documentary on HBO

[joni brit]

10:45 PM on 06/02/2011

Well Hello, took Moody's long enough. Of course we are close to default, the question is, is the US too big to fail? Well we are going to find out very soon, when China, says no more, we ain't buying....Our economy is like all these empty REMIC Trusts, if everyone starts calling in their chits, the only survivors will be all they guys who knew to stash away their bonuses!!!! It's depression time baby, regardless of who is running the store.

[unknownsoldier53]

10:55 PM on 06/02/2011

The juveniles on both sides want to play chicken without regard to the consequences. I'll be pulling all my investments out of stock market for the time being. Truly, where are the grown-ups on either side.?

[joni brit]

12:01 AM on 06/03/2011

of course if people have any money left to invest they should be pulling out of the stock market. But into what? You don't think all these Bankers were buying gold with their bonuses? Of course they were. credit default swaps on one hand and buying ounces of gold on the other. The worthlessness of paper currency, the Bankers recognized it more than anyone,

[robbyr2]

12:02 AM on 06/03/2011

China can't stop buying dollars, at least until we declare bankruptcy. If we fall, the PRC falls and they know it.

[joni brit]

12:16 AM on 06/03/2011

Watch Too Big to Fail, documentary on HBO. No one, no bank, no country is too big to fail. If this Government props up the Banks again, it is only because they think they are too big to fail. Right now the American Government has failed the American people, we are not heading towards a depression, we are in a depression. The Republic of China is not.

[Thumbody]

10:18 PM on 06/02/2011

Being that Moody's is so credible can't the Government just pay them off for a higher rating like the mortgage companies did?

[joni brit]

12:04 AM on 06/03/2011

why would they do that? Moody's has nothing to do with the fall of the Government's worth, paper american currency is not even worth the paper it is printed on any more, devaluation of the dollar has made gold prices soar. We don't need Moody's to tell us not to invest,

[traceymarie]

08:48 PM on 06/02/2011

Just for power and to follow through on the bagger/repub mantra of "I want Obama to fail" they will destroy the country once again. Thanks repubs for deregulating and killing the financial sector and now for threatening the USA.

[nkurland]

08:11 PM on 06/02/2011

Well, well. Turns out we aren't broke after all. Apparently a certain 10% of the public just doesn't feel like paying their way.

Guess which party they vote for?

[Libertardo]

08:07 PM on 06/02/2011

The Democrats are going to have to basically give cover to Republicans in the debt limit vote by supporting Ryan-like changes to Medicare in the same vote. We're all in this together now, and leaving Medicare alone will bankrupt the entire United States. You Dems have had your fun in upstate NY, but we've got a general election next year. It's time to use the Ryan plan for the excellent discourse it stimulated and whitewash it with multitudes of Democratic votes and Obama's signature. That's the only way we're going to see a debt limit increase.

[baddreams]

08:27 PM on 06/02/2011

that's funny...you are kidding...right...cause a democrate could just as well
flush ryan and his plan along with the rest of the repub's down the crapper...
which is what is going to happen..NY26

[Libertardo]

08:30 PM on 06/02/2011

It's either the Ryan plan (or something "politically" indistinguishable from it) coupled with the debt limit increase, or no debt limit increase. It's gonna be a hot, hot summer, baddreams.

We play for keeps, sun

[traceymarie]

08:50 PM on 06/02/2011

nonsense, ryans plan does nothing but hurt the poor and elderly and give the top 2% a 10% tax cut and corporations will also receive more cuts and credits.

[Libertardo]

09:14 PM on 06/02/2011

We may not get the Ryan plan in the debt limit deal, I'd be willing to concede that.

But Republicans should not agree to raise the debt limit without concessions which will compromise the President's standing with voters such as yourself heading into the 2012 elections.

[leftLibertarian]

08:03 PM on 06/02/2011

If the US wants a better rating, it needs to bride Moody's.

[joni brit]

10:52 PM on 06/02/2011

It is what it is!!!! Moody's is not the real estate market boosted by appraisers trying to make a living, it's an objective entity saying, America is not the investment it used to be. Americans are afraid of their own Government, there is no more middle class, who loves America anymore, and who doesn't feel let down by this Government? The Bankers who are going to get bailed out again, that's who love this Governmen!!! Government bailouts do not create jobs!!!! People create jobs.

[dadw5boys]

11:13 PM on 06/02/2011

read up on Moodys past

[TurnSeiki]

07:15 PM on 06/02/2011

The libs better figure something out. If they can't find something to cut (shrimp running on treadmills), they're really not trying.

[traceymarie]

08:52 PM on 06/02/2011

they have tried but the bagger/repubs are hell bent on destroying the middle class and the poor while they give the wealthy another 10% tax cut.

[dadw5boys]

11:15 PM on 06/02/2011

a Republican got that college a grant --- they shrimp on a treadmill was not paif got with Government Money. It was a Student project that's all and it was 8 years ago too.

[greensachs]

07:14 PM on 06/02/2011

phone your representative, your Senator, push them to investigate, indict and remove the executive directors of the ratings agencies, close them and de-list them from public exchanges.

They've been part and parcel to the corruption at the core of our financial system...and while you're at it, tell our corporate crony AG Holder to LOOK BACK where the crimes are found.

[structurequity]

07:05 PM on 06/02/2011

I see China unloading their holdings in U S of A money and letting us feel the heat of a possible default ala Portirelagre...

[EdCorner]

07:04 PM on 06/02/2011

Don't raise the debt limit, just get rid of the Federal Reserve and their debt notes (federal reserve notes) and high interest and pay off the debt with money the US Government prints.
No more debt limit because there is no Federal Reserve.

Why would a Moody's downgrade mean anything anyway? Shouldn't those guys be in jail? If they take down our rating for not raising the debt limit, get the DOJ on them. Why not. It's all a racket and crooked anyway

[robbyr2]

12:09 AM on 06/03/2011

Maybe you should study up on the debt limit. It has nothing to do with the Federal Reserve. Oh, and the guy who thought up the Federal Reserve was the greatest financial genius of the last few centuries. Who are the financial geniuses who think J Pierpont Morgan's Federal Reserve should be abolished? Ron Paul? The Koch brothers?

[EdCorner]

10:24 AM on 06/03/2011

You really have no clue. Go read the book or see the video on "The Creature from Jekyll Island"

[rocknrollinhoneybadger]

06:56 PM on 06/02/2011

Isn't Moody's the same group of folks who messed up on the ratings of the subprime loans? Yea, I'd listen to these guys. Really sharp folks there.