Moody's confirms US credit rating at AAA

[Exotix]

*BREAKING*

Moody's confirms US credit rating at AAA after debt ceiling lifted.

Debt downgrade still possible despite deal


http://www.msnbc.msn.com/id/43987798...n_the_economy/



Geithner unsure; reduced rating might have only small impact

A bill aimed at reducing future deficits by $2.1 trillion, signed into law by President Barack Obama Tuesday, might not be enough to avert a downgrade of the nation's top-notch credit score by at least one of the major rating agencies.



Major Market IndicesAll three agencies had warned of a potential downgrade, although Moody's late Tuesday affirmed its top Aaa rating for U.S. debt, saying the new law has "virtually eliminated the risk" of default.

But Moody's assigned a negative outlook for the United States, meaning it could still downgrade the securities, although probably not anytime soon.
Moody's said there would be a risk of downgrade if there is "a weakening in fiscal discipline, a deterioration in the economic outlook or if Congress fails to adopt more deficit-reduction measures in 2013.



A second major agency, Fitch, said it would complete its review of the nation's sovereign debt rating by the end of August and did not rule out a downgrade.

"While the agreement is clearly a step in the right direction, the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if the budget deficit and government debt is to be cut to safer levels over the medium term," Fitch said in a statement.

David Riley, Fitch's top analyst, told Reuters the company also was concerned by a sharp downward revision in economic growth figures reported Friday.

"There could be a rating action which could include a revision of the outlook," Riley said. "I certainly couldn't rule that out."



Standard & Poor's, the third major agency, has so far declined to comment.

The agency has warned that the nation's credit rating would be subject to a downgrade without a credible deficit-reduction package worth $4 trillion over 10 years. The package agreed to by congressional negotiators falls well short of that mark.

Treasury Secretary Timothy Geithner said earlier he was not sure whether the bitterly fought debt agreement would be enough to avoid a downgrade of the U.S. top-tier credit rating.

Geithner said the ratings agencies were "going to take a careful look" at whether Washington politicians have the will to act to bring deficits under control.

"It's not my judgment to make" whether the deal is enough to avoid a downgrade, he said in an interview with ABC News that aired Tuesday.



The Dow Jones industrial average fell more than 265 points, dropping below 12,000, partly on concerns about a potential downgrade.

Geithner added that the battle over the debt limit and the threat of default had damaged confidence in the economy, but said he did not think there was a significant risk of a double-dip recession.

"I think this is a good result but a terrible process," he said.
"And ... I think as the world watched Congress step up to the edge of the abyss, it made them really wonder whether this place can work.
But this is a good deal. It's a good agreement."



William Gross, managing director of bond giant PIMCO, was unimpressed.

"Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit," he said in a note to clients. "'Out year' fantasies, as opposed to 'current year' realities, is an apt description of the spending cuts that characterize this compromise."



Ironically, after all the concern about the potential economic cost of a downgrade, some analysts are now predicting that a downgrade might not make that much difference.

"Market participants have the same information that ratings agencies do," said Michael Moran, chief economist at Daiwa Securities America in New York. "(That information) should already be reflected in interest rates."

The bond market is the ultimate arbiter of sovereign debt worries, and low U.S. yields suggest none of the anxiety that sent Greek yields soaring during that country's fiscal crisis.

Investors see the United States in a much different situation than crisis countries such as Greece.
Awash in debt though it is, the United States is still able to pay its bills while Treasury bonds remain liquid and in demand.



Benchmark 10-year yields now stand at 2.74 percent, which is just 0.7 percentage point from the all-time low and follows weeks of high-tension haggling and fears political paralysis could result in a default.

Historical experience suggests a downgrade would produce none of the bond-market angst some fear.
Japan lost AAA status more that a decade ago and it has some of the lowest interest rates in the developed world.

As it was with Japan, the big issue for markets is the weak U.S. economy, which could slow further due to the spending cuts in the deficit-cutting deal.

This fiscal restraint could curb spending, job growth and inflation -- the biggest drivers of bond yields.

Reuters contributed to this report.



... at closing ...

[Exotix]

Todays Clarification ~ AAA Rating with negative outlook ... based on economy i.e. unemployment, housing etc.

[ChasC5]

Originally Posted by Exotix

Todays Clarification ~ AAA Rating with negative outlook ... based on economy i.e. unemployment, housing etc.

I’m sure the GOP will try harder next time.

[Will]

Moodys.

Remind again what kind of ratings they gave to mortgage backed securities backed by junk mortgages ???


China Boldly Goes (Again) Where Moody's Has Never Gone Before, Downgrades US From A+ To A, Outlook Negative

As was predicted last week, China's rating agency Dagong, unlike its worthless western counterparts, has come through on its threat to downgrade the US in the event a subpar debt ceiling deal was hammered out. As Xinhua reports, 'Dagong Global Credit Rating Co. said Wednesday it has cut the credit rating of the United States from A+ to A with a negative outlook after the U.S. federal government announced that the country's debt limit would be increased." Confirming that not being branded a NRSRO is the only thing that allows a rater to still think straight (and not in terms of lost client revenue if one goes ahead and tells the truth), Dagong's decision was spot on: "The decision to lift the debt ceiling will not change the fact that the U.S. national debt growth has outpaced that of its overall economy and fiscal revenue, which will lead to a decline in its debt-paying ability, said Dagong Global in a statement." So while Moody's, which is now certified as the laughing stock of the sheep herd (sorry Mark Zandi, you will never be promoted to anything in this administration - we promise you), pretend that all is well and that the only thing better than $14.3 trillion in debt is $16.8 trillion, China demonstrates what happens when a rating agency actually knows how to do addition and/or long division.

And just to make sure that China's intentions are (once again) very clear, the PBOC earlier said that is will continue diversifying its reserve assets and will “closely observe” the implementation of U.S. debt-limit agreement, welcoming the law as ensuring the market functions effectively and investing in Treasuries as safe. The odd sentence out was this: "China will also try to strengthen risk management and minimize effect of fluctuations in global financial markets on its economy." Is the PBOC in the process of implementing a MOVE vol threshold for its bond holdings? It would be interesting if China's dumping of Treasurys is directly proportional to the amount of HFT algos trading them. Then again, that is one sure way of eliminating the high frequency parasites from any market once and for all...

From Xinhua:

And elsewhere, from the PBOC, google translated of course.

http://www.zerohedge.com/news/china-...tlook-negative

[mrvette]

WE are AAA only because of the stone total outta control and complete ignorance and ineptitude of the rest of the countries, except China and Japan....they are on a par with us, I think anyway....

[Peter Pan]

Awesome and the Fed is pumping in the 3rd wave of dollars to assist this great recovery we have had

[Joecooool]

If our credit rating drops, expect another 25% drop in housing prices as mortgage interest rates will be going up.

Real estate agents are shitting themselves over the thought.

[Exotix]

Originally Posted by Peter Pan

Awesome and the Fed is pumping in the 3rd wave of dollars to assist this great recovery we have had

You need to see Hoover going into 1929 regarding his caving-in to Republicans about Govt. spending ... then see FDR's govt. spending known then too as Stimulus then what happened when he stopped spending to tackle the deficit ... a recession following a depression ... goes to the little saying about history ...

[Peter Pan]

Originally Posted by Exotix

You need to see Hoover going into 1929 regarding his caving-in to Republicans about Govt. spending ... then see FDR's govt. spending known then too as Stimulus then what happened when he stopped spending to tackle the deficit ... a recession following a depression ... goes to the little saying about history ...

What did the stimulus get us in new jobs? Recently large Corps are again in layoff mood, 60k in new layoffs announced, our leader has talked about shovel ready jobs and jobs many time in his almost 3 years in office and we are as a country worse off than in 2008, unemployment has stayed under 8% with all the uncontrolled spending, we might as well increase so we can become Greece soon.

[mrvette]

Originally Posted by Peter Pan

What did the stimulus get us in new jobs? Recently large Corps are again in layoff mood, 60k in new layoffs announced, our leader has talked about shovel ready jobs and jobs many time in his almost 3 years in office and we are as a country worse off than in 2008, unemployment has stayed under 8% with all the uncontrolled spending, we might as well increase so we can become Greece soon.

The tracks are greased, we will slid to the level of grease soon enough....




it's slicker than snot on a brass doorknob....

[Will]

Originally Posted by Joecooool

If our credit rating drops

IF ???

When.

Even the shysters at Moody's won't purposefully bury their heads in the sand forever.

And we just learned that ONLY Tea Party Republicans are serious about the issue. The old-guard is NOT.

The chance of Republicans winning the presidency, retaining the house, and winning the senate is actually pretty good.

The chance of TEA PARTY conservatives doing so is almost zero.

I do not foresee the necessary actions being taken anytime soon, that being $1 Trillion in spending reduction EVERY SINGLE YEAR, NOT cumulative over TEN years.

[ChasC5]

Ironic how these groups are never serious about an issues during the terms they are in office. Because if you do, you're called "unpatriotic"; "weak"; "cut-n-run" ... and so on and so on.

[LATB]

Originally Posted by Joecooool

If our credit rating drops, expect another 25% drop in housing prices as mortgage interest rates will be going up.

Real estate agents are shitting themselves over the thought.

another ignorant post from Mr. Coool

real estate sold well during the Carter years when mtg rates were near 20% in many cases.

only ignorance and/or lack of industry knowledge would have one believe that mtg rates are the only catalyst to home buying.

low mtg rates are a great tool for agents...so are granite counter tops and pretty plants by the front porch.

[mrvette]

Went out on a key pickup call for one of the investors I used to remodel houses for, he had a family shituation so they broke up the business, and he moved to hotlanta....SO, the house is for sale, but not less than 120 grand, nice house, price seems cheep to ME, BUT, the tenants were going to buy the joint, and it's not possible because they bought the same thing directly across the street for 67 grand.....
the investor owes 120grand on it....and too boot, EVERY one of the over large double thermal windows has let the seal go and they are full of condensate.....

there is NO WAY IN HELL,....so he is looking to rent it to just cover the payments, and get some 1200/month....making the overall bill to live there about 2 grand/month for any tenant.....

so we got some minor repairs and cleanup work in there anyway.....