Via a story on CNBC, we learn that Moody’s issued a caution on America’s debt rating.
Reducing Deficit Key to US Rating: Moody’s
The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody’s Investors Service said on Thursday.
XX Sean’s take — Not helping matters is that not only did the U.S. government post a deficit of $1.417 trillion in the fiscal year just ended, but those big deficits extend as far as the eye can see. The White House has forecast deficits of more than $1 trillion through fiscal 2011, but more realistic forecasts have them going to 2015 or longer.
Back to the story …
“The Aaa rating of the U.S. is not guaranteed,” said Steven Hess, Moody’s lead analyst for the United States said in an interview with Reuters Television. “So if they don’t get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy.”
What do you think a cut in the U.S. debt rating would do to the dollar? What would it do to gold? Yeah, that’s what I was thinking, too.
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{ 2 comments… read them below or add one }
Thanks for your informative site. I’d just like to point out a different way of looking at 1.417 trillion.
It’s minus $1.417,000,000,000,000. Hope that doesn’t scare you too much….
The huge spending is unfortunate, but a bitter and hopefully temporary pill to swallow. Just as seeing a cardiologist for a heart attack is expensive, so is saving banks and large institutions from failure and prevent the repeat of 1929. Currently, I jumped on an opportunity to buy Berkshire Hathaway stocks. If anyone can navigate the storm, I believe Warren Buffet can. The last time we had a nearly balanced budget was in 1999, and 2000. Since then the powers to be used tax cuts, and lowered interest rates in a quasi permanent fashion. When the bottom fell out of housing, the highly leverage paper the wall street banks were peddling were worthless, and the feds, and Washington had used up all of their ‘tools’ that should have been temporary. If we don’t control spending, become leaders in green energy to increase exports in green technology, and reduce our imports, especially foreign oil, then we become third class citizens.