Moodys Say US Default NOT Tied to Debt Ceiling

This is short and to the point — but for the people who are listening to Obama’s scare tactics need to read this and maybe read it again. This is the agency who makes the decision about whether to low a country’s credit rating. Hmmmm – seems they would know far more about the reality of this situation than anyone in the Obama administration. Moodys also says the same thing I did a couple of days ago — the government MUST learn to prioritize… What government spending would you suspend??

However, their assessment does not factor in the political motivations of the administrations….

Oct 8 (Reuters) –

Moody’s Investors Service sees very little chance of a U.S. debt default later this month, the rating agency’s president and chief operating officer said on Tuesday.

“We have a “AAA” rating and “stable” outlook (for the United States), which reflects our view that a default is an extremely unlikely event,” Michel Madelain told a conference in Tel Aviv.

“The shutdown does not really affect the government’s creditworthiness.”

He said the agency believes the U.S. government will take every possible step to continue to pay interest and principal on its debt even if the debt limit is not raised.

Moody’s offers different view on debt limit

” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.

The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”

The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.

“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.

Treasury Department officials did not immediately respond to requests for comment.

Sources –


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