S&P places U.S. credit ratings on negative watch, warns of possible downgrade

[News_Editor]

S&P places U.S. credit ratings on negative watch, warns of possible downgrade

2011-07-15 07:36:51 GMT+7 (ICT)

WASHINGTON, D.C. (BNO NEWS) -- Standard and Poor's (S&P) on Thursday placed the United States' top-tier credit rating on a negative watch for a possible downgrade within the next three months.

S&P said that there is at least a one-in-two likelihood that it could lower the long-term rating on the United States within the next three months due to the dynamics of the political debate on the debt ceiling.

"We have also placed our short-term rating on the U.S. on CreditWatch negative, reflecting our view that the current situation presents such significant uncertainty to the U.S.' creditworthiness," a research update from S&P said. "Since we revised the outlook on our 'AAA' long-term rating to negative from stable on April 18, 2011, the political debate about the U.S.' fiscal stance and to related issues of the U.S. government debt ceiling has, in our view, only become more tangled."

S&P noted that, despite months of negotiations, Democrats and Republicans remain at odds on fundamental fiscal policy issues. "We believe there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling. As a consequence, we now believe that we could lower our ratings on the U.S. within three months."

In response to S&P's announcement, U.S. Treasury Under Secretary for Domestic Finance Jeffrey Goldstein said it restates what the Obama Administration has said for some time. "Congress must act expeditiously to avoid defaulting on the country's obligations and to enact a credible deficit reduction plan that commands bipartisan support," he said.

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[Steely Dan]

The U.S is bust and can not hope to pay it's debts in any way other than decreasing the debt by printing more money and thus indirectly robbing dollar asset holders. Everyone knows this is the case but the realpolitik is do nothing about this as a direct banana republic style default would be even worse. I do expect there will be serious consequences for the U.S when the dollar loses it's mantle of being world reserve currency.

In response to S&P's announcement, U.S. Treasury Under Secretary for Domestic Finance Jeffrey Goldstein said it restates what the Obama Administration has said for some time. "Congress must act expeditiously to avoid defaulting on the country's obligations and to enact a credible deficit reduction plan that commands bipartisan support," he said.

What egregious nonsense, the U.S treasury has no intention of turning off the spending spigot till after the next election.