U.S. Debt – Rating agency Moody’s Investors Service on Wednesday (08/03/2011), said U.S. debt ratings still at AAA position, after the provision of additional budget savings and raise debt ceilings. However, Moody’s gives negative outlook on the U.S. debt.
The negative prospect of meaning in the near future the possibility of ranking will be lowered. Downgrading will be done if the government undiscipline in managing fiscal or the economy significantly worsened.
Credit downgrades led to rising interest rates demanded by creditors. The impact will be significant to the economy in general. Rising interest rates mean that the government, companies and even individuals have to pay a higher interest rate when borrowing money again. Moody’s has never been assigned a rating lower than AAA to the U.S. government since it began observing the U.S. debt in 1917.
Another Rating Agency Opinion
Previously, another rating agency, Fitch Ratings stated Congressional action increasing the budget cap and make the pruning is an important step but not the end of a process.
Fitch hopes there will be a conclusion regarding the study of warning the U.S. debt at the end of August. Fitch officials said they were watching developments and things that may be exacerbating the problem of government debt.
According to Moody’s, budget cuts amounting to 917 billion U.S. dollars in 10 years and the establishment of a congressional committee should make recommendations on additional savings of 1.5 trillion U.S. dollars untested. “The combination of congressional committees and the establishment of an automatic mechanism for reducing the fiscal untested. If there is a new mechanism established by the Budget Control Act was not effective to give a bad influence on the ratings,” Moody’s said in a statement.
S&P Not Give Comment Yet
Standard & Poor’s has not commented. According to S & P, the austerity package was supposed to be worth 4 trillion U.S. dollars, to achieve the level of debt that can be managed properly. S & P seems to be the agency most likely lowers U.S. credit rating. – U.S. Debt
