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KDakotaFund (24.18)

Does the US Deserve its Triple-A?

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October 14, 2010 – Comments (5)

Will the credit ratings agencies downgrade the US's triple-A rating, which it has held since 1917?

Moody's Investors Service and Standard & Poor’s have made threats to downgrade the US in the past, but the threats are coming more frequently in recent years, along with tougher language.

One big breaking point for the credit ratings agencies: Interest costs on the US debt as a percentage of total federal tax revenues.

Keeping the interest cost to federal tax revenue ratio stable is why the government is increasingly talking about ways to raise federal taxes in order to avoid an embarrassing credit rating downgrade, exacerbated by soaring government spending.

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5 Comments – Post Your Own

#1) On October 14, 2010 at 4:43 PM, starbucks4ever (97.24) wrote:

If Moody's downgrades Uncle Sam, how many minutes do you think it will take for Moody's stock to hit zero?

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#2) On October 14, 2010 at 5:24 PM, rfaramir (29.32) wrote:

If fiscal conservatives win in November, then maybe, just maybe, there's a hope for the US's AAA rating.  (I don't just mean Republicans here, but that's close enough.)  Personally, I don't hold out much hope even then, and am planning financially accordingly.

 

If the free-spenders (Democrats for short, but that's inaccurate) retain control, then we deserve a lower rating for sure.  It's not a political thing, it's an economic thing.  At the current rate, we'll implode our currency's value and therefore our bonds very soon.

 

Moody's ought to be taken out back and shot for missing the mortgage derivatives rating debacle.  Or better yet, remove all government granted privileges for the rating companies.  Free the market to use whomever they think will give accurate ratings.  Enough mercantilist fascism, already.

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#3) On October 14, 2010 at 5:26 PM, leohaas (31.56) wrote:

These are the same guys who rated many mortgage-backed securities AAA, and who had a rating not much lower than that on LEH and BSC shortly before they collapsed. I just don't understand that these rating agencies are still in business...

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#4) On October 18, 2010 at 8:19 PM, loverandfighter8 (< 20) wrote:

At this point, credit rating agencies are useless and America's Triple-A rating is a joke.  Our country is a fraud living on borrowed time and money, regardless what party wins the election.  Democrats and Republicans are both sides of the same coin, if you hadn't noticed.  The only way we can pay our hyperridiculously enormous debt is by printing money and paying people back with devalued dollars.  Even if someone of virtue and integrity like Ron Paul became president and did all the right things, there's simply no avoiding a correction that will cripple us and severely diminish our standing in the world for decades before eventually getting back on track.   

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#5) On October 19, 2010 at 8:36 PM, KDakotaFund (24.18) wrote:

loverandfighter8

Well, I don't know about decades, but you're right.

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