NEW YORK (Reuters) – Moody’s Investors Service said on Wednesday it will hold off on its judgment of whether to cut its sovereign credit rating for the United States until after the 2013 budget process is completed.
What budget process? The US doesn’t do that anymore. The American people in their infinite wisdom has decided we don’t need a budget, that’s why they re-elected Obama and left Reid in charge of the senate.
Actually, I think Moodys didn’t mean they won’t. They’ll see no budget process and then downgrade.
If policymakers are able to reach consensus and produce a budget that results in a stabilization of the fiscal outlook and “then a downward trend in the ratio of federal debt to GDP (gross domestic product) over the medium term,” Moody’s repeated it would likely affirm the Aaa rating and return the rating outlook to stable.
“In contrast, if negotiations fail to produce policies that lead to debt stabilization and ultimately reduction, then we expect to lower the rating, probably to Aa1,” Moody’s said, outlining a one notch downgrade.
Fitch Ratings holds a similar view with its AAA rating and negative outlook, reiterating earlier on Wednesday that a credible deficit reduction plan must have both tax increases and spending cuts.
In August 2011 rival Standard & Poor’s, in an historic move, cut its rating on the United States by one notch to AA-plus from AAA over the political gridlock in Washington that produced an environment so divisive as to prevent deficit-reduction measures.
Fitch is funny, they seem to be prescribing the same formula which has led to such resounding successes like Greece.