U.S. Credit Ratings Put On Negative Watch By S&P

(Reuters) - Ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon.

Putting the U.S. on negative watch, S&P warned that it could cut the rating this month if talks between the White House and Republicans remain stalemated. Any cut would be by one or more notches, it added.

"Today's CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days," the agency said in a statement on Thursday.

The deadline to raise the ceiling is on August 2.

"We have also placed our short-term rating on the U.S. on CreditWatch negative, reflecting our view that the current situation presents such significant uncertainty to the U.S.' creditworthiness."

The agency also warned that even if there was a deal done on raising the ceiling, it might still cut the rating if it was not convinced that the deal would stabilize the country's medium-term debt dynamics.

"If an agreement is reached, but we do not believe that it likely will stabilize the U.S.' debt dynamics, we, again all other things unchanged, would expect to lower the long-term 'AAA' rating, affirm the 'A-1+' short-term rating, and assign a negative outlook on the long-term rating," said S&P.

(Reporting by Wayne Cole; Editing by Balazs Koranyi)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Scott Zwartz]

01:25 AM on 07/17/2011

Michele Bachmann has cited this article as proof as nothing bad will happen if we do nor raise the debt limit.

BTW, if I were one of her children, I'd want a DNA test. Just saying

[globalguy]

05:09 PM on 07/16/2011

Duh! This should have happened alongggg time ago! When you spend more than you make that's what happens. Why is anyone shocked? Suck it up USA and get your deficit spending in order and maybe you can earn a better rating...

[Eris23Skidoo]

01:17 PM on 07/16/2011

"...it might still cut the rating if it was not convinced that the deal would stabilize the country's medium-term debt dynamics."

In other words, if we don't raise taxes in order to ensure that the debt actually goes DOWN sometime before 30 years from now (like in the no-tax Ryan plan which doesn't start paying down the debt until year 31), they are going to cut our rating.

[Scott Zwartz]

01:25 AM on 07/17/2011

No that is not what it means. Why would you thin it means that?

[Eris23Skidoo]

05:24 PM on 07/17/2011

If our debt situation remains unstable our rating goes down. If we raise taxes back to a responsible level we will be able to pay all of our bills. Until we raise enough revenue to pay off our bills we will remain broke. I would think it means that because I understand basic math and I have an economics degree to back up my assertions.

[Selah]

12:26 AM on 07/16/2011

It is convenient that Mr. Bernstein doesn't present a chart of Mr. Obama's spending as a percentage of GDP and our deficit as a percentage of GDP. Both of these numbers are in record territory.

It is also telling that Mr. Obama who has only engaged in the discussion in the last two weeks and STILL hasn't presented a plan, is getting unearned credit for his part in this debacle.

Negotiate the spending cuts now. Take the next few months to negotiate the tax code overhaul - you can't do that in two weeks.

[Eris23Skidoo]

01:18 PM on 07/16/2011

How about we do what 67% of Americans want and that is NO spending cuts, paired with tax increases on the top 2% who haven't PAID any taxes in over a decade.

[globalguy]

05:12 PM on 07/16/2011

LOL...when you have 20% of the taxpayers paying almost 80% of the taxes we don;t have enough citizens with skin in the game....the solution? Flat tax, no dedcutions (i.e. loopholes) and a fairer system for all....

[Lego87]

04:48 AM on 07/17/2011

You think we shouldn't cut at all? I mean we spend more on our military machine than the rest of the world probably put together. We have plenty of room for cuts and waste, regardless if taxes are raised or not.

[Scott Zwartz]

01:26 AM on 07/17/2011

The debt limit has nothing to do with cutting spending or raising taxes.

[Grant in Calgary]

11:52 PM on 07/15/2011

This is the economic equivalent of the MAD Doctrine.

[Charlie43]

11:18 PM on 07/15/2011

This only reconfirms to me why I have never, in my 67 years, voted for a Repuglican. (And yes, that is how I spelled it) I have no issue with peoples's beliefs and principles. I think that is a good thing. But when the country begins to suffer, and millions of people that are disadvantaged begin to suffer for Tea Party ideals, I take umbrage. I speak of people who are disabled, who are elderly, who are living in poverty. Any thinking American should do the same. We are supposedly a country of compassion. Maybe I should move to Russia? Just sayin'...

[Eris23Skidoo]

01:19 PM on 07/16/2011

You'll find more compassion in a hard-core ex-Soviet from Russia than you'll ever find in one of our libertarians here.

[FoxIslander]

06:41 PM on 07/15/2011

Isn't this the same S&P that 2 years ago was giving all those mortgage backed CDOs a triple A rating?

[Eris23Skidoo]

01:21 PM on 07/16/2011

Unlike the govt, the banks were bribing individuals within the ratings agencies to get them to falsely label their bonds AAA. The govt doesn't work like that. The govt doesn't make bribes, although individual politicians certainly take them.

[Scott Zwartz]

01:29 AM on 07/17/2011

Yes, the one and same. That tells you how bad the situation has become. The GOP cannot bribe S&P and Moodys to lie. Now thatg's bad/

G-d however told Michelle that there is no need for concern.

[soeasy]

06:22 PM on 07/15/2011

Do not get too impressed! We should not forget that S&P does not have all that moral , but have several other interesses. In 2007, when the big losses began, in the stock market, they were giving highest rates even to riskest pools of loans.

[cuunorris]

04:26 PM on 07/15/2011

It's like TRW trashing my credit score because they heard I was negotiating my position with an employer and were uneasy about the possible outcome. It's bull. It's Wall Street trying to extert pressure to influence the outcome.

[Eris23Skidoo]

01:23 PM on 07/16/2011

So you think they should just lie about our credit rating in order to help the teagaggers deny the reality of what they are doing to our country?

[llwlknsn]

04:02 PM on 07/15/2011

Now you know you live in a plutocracy. The S&P NEVER wanted to put Wall Street on notice that they were headed into the ditch and only admitted it after the fact. NOW they are only too eager to put the US on notice. Seriously?

[cuunorris]

04:26 PM on 07/15/2011

Anyone paying attention has realized that for some time, now.

[Eris23Skidoo]

01:24 PM on 07/16/2011

And anyone paying attention longer than THAT will recall that it was individuals within the ratings agencies that were covering for the banks, not the ratings' agencies themselves. Those same individuals have yet to be bribed by the Treasury dept to wrongly label our credit rating.

[TheEnergyDD2]

03:35 PM on 07/15/2011

Ok... sooo what your saying is that I currently have a better credit rating than the US government...? What kind of a scale are these people using... If this was a regular person with a billion dollar income weighed down by trillion dollar debt, the rating would have been dumped longed ago. This is capitalism at its worse. What kind of a nation forecloses on itself...! Everything about this country is PAPER... with no hard backing and no support.

[wallymundo]

03:19 PM on 07/15/2011

A negative watch!!!! Who are they kidding!!! Just my share of the national debt, for which I did not authorize or spend, is over $350,000.00. This is just for me, my two kids and my wife owe the same for each of them. My lender suggested I file bankruptcy!!!! Thank You Obama.

[MaryfromIL]

03:09 PM on 07/15/2011

Usually downgraded credit means we pay much higher interest.

US has their good name to keep people lending us money, etc. We lose that, we are in big trouble, and the world economy will follow.

Time to plan for big economic upheaval again. Last time we had to do it was about 3 years ago; remember 2008?

[Eris23Skidoo]

01:28 PM on 07/16/2011

Republicans just won't stop shutting the economy down. Don't they realize that every time they do this we'll have to come up with a stimulus to get everything moving again? I thought they hated stimulus. Maybe they like creating a situation in which we need a stimulus but don't like the stimulus because it is too expensive and too effective at saving us from the brink.

[MaryfromIL]

04:24 PM on 07/16/2011

Their goal is power. If they have to bring the nation to the brink and maybe beyond, they are willing to do that. Result is even a faster slide into banana republic status, which they would love.

[randyman99]

02:52 PM on 07/15/2011

People are already moving funds in anticipation of a problem. It's hurting the economy. How do the Repubs hope to hang this around Obama's neck? Oh yeah, their followers are watching Faux, which is twisting the facts. What silly games they play, with real life consequences.

[MaryfromIL]

03:09 PM on 07/15/2011

wonder how busy the stock brokers are today?

[Eris23Skidoo]

01:33 PM on 07/16/2011

I guess it didn't occur to republicans that although those of their base who watch teevee will be fooled, nobody else will be. And Fake News viewers make up something like 3% of the country. The vast majority doesn't pay attention to news outlets of any type. Most of them hear one or two things during a political campaign and base their vote on those. During off-years, they aren't even paying attention. Since they are so disengaged, I can see why republicans would risk what they are risking and just assume that Fox will cover for them and that a slight majority of Americans will get some propaganda from them. But what if one of the few things they hear during campaign season is how the republicans held their fat boot on the neck of the economy and did everything they could to prevent a recovery? Of course they won't be hearing such things on Fox but since the other channel's news departments traffic in facts...

[LostinSocialSpace]

02:51 PM on 07/15/2011

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