Worried About Our Credit? Debt Ceiling?

In 2011, lawmakers merely threatened a government shutdown as the United States' debt surged toward the debt ceiling. Standard & Poor's, owned by McGraw-Hill Financial (NYSE: MHFI ) , then went on the offensive, slashing the government's debt rating to AA+. So, too, did the smaller Egan-Jones.

The other ratings agencies, Moody's (NYSE: MCO ) and Fitch, kept the U.S. government at AAA, the best possible credit rating.

What followed after was interesting, to say the least. In 2012, Egan-Jones became subject to an inquiry by the SEC, which later voted to bring administrative action to strip away its ability to rate government debt for 18 months.

In 2013, the Justice Department brought a suit against Standard & Poor's for its financial crisis-era ratings. This was the first of federal action against the agency for its involvement in rating subprime debt as AAA credits.

But that February 2013 suit only named Standard & Poor's. Moody's and Fitch -- which had also issued AAA ratings for mortgage securities that proved to be anything but high quality -- never got their time in the courtroom.

Standard & Poor's shot back quickly, claiming they would defend themselves "vigorously." The battle is far from over -- these kinds of lawsuits tend to take years to reach a conclusion. But whether or not Standard & Poor's wins or loses, it'll have a costly legal bill to pay either way. Lawyers are the only winners in a high-profile case.

A grand conspiracy?
It's been more than eight months since the Justice Department sued Standard & Poor's, but Moody's and Fitch have remained scot-free. Egan-Jones is still in the sandbox, unable to issue ratings with a government stamp of approval.

This may explain why Moody's and Fitch have been so quiet through this government shutdown and debt ceiling debacle. Moody's recently reaffirmed its AAA-rating of U.S. debt with a stable outlook, noting an improved debt trajectory. Fitch merely said that failure to raise the debt limit in a "timely manner" would force it to reconsider its ratings.

That's it -- warnings of action, not action. Any downgrade from Moody's and Fitch would come only when the government absolutely deserves it -- if it allows the government to default on its debt.

If you're watching and waiting for the U.S. government to lose its gold-standard, AAA-rating, you can probably forget about it. The last two agencies that went so far to strip an AAA rating from the U.S. government found themselves subject to regulatory scrutiny.

Moody's and Fitch have their own pre-financial crisis skeletons in the closet. Lowering the government's debt rating from AAA would be a surefire way to bring these problems back into the light. For that reason, I wouldn't expect a downgrade any time soon, if at all. The agencies are just too chicken to call out Congress' shenanigans.

If this is what it takes to get a balanced budget then so be it. Our government has spent far to much money that they didn't have forever. Time to live with in their means just like tax payers have to. Phone Post

Source?

I still think matters are far more complicated due to the amount of international debt levels. And ANY attempt to simply print more money than they already are (which is barely keeping up with interest) will just drive more countries away from the USD as the world stanard.

And that's when a free fall will happen. And no one wants to see that unless your Chinese and have gotten your money back from the US already. Phone Post

THERES A SALE AT WALMART!!!!

nothing to see here

make sure to vote for your shitty team in the next election

Hired Gun - 

If this is what it takes to get a balanced budget then so be it. Our government has spent far to much money that they didn't have forever. Time to live with in their means just like tax payers have to. Phone Post


Credit cards, loans, and bankruptcies say what?


(I kid...I kid......I....think?)

Keep spending! Think of the children!!!

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