Photo: US Senate
We wonder if any sovereign debt raters at Moody’s or S&P were watching the Sunday news shows today.If they were, they got a huge reason to cut the US’ AAA credit rating. Several GOPers came out and threatened not to hike the debt ceiling — among them Lindsay Graham, the Senator from South Carolina, speaking on Meet The Press.
Specifically Graham noted that unless there was an agreement to do something about the long-term deficit issues the US is facing (including Social Security), then there would be no vote to hike the debt ceiling. And if there’s no agreement to hike the debt ceiling the US could default imminently.
To put it simply: The US’ AAA rating is insane. Imagine another AAA-rated entity where major stakeholders were openly endorsing an action that could lead to default. Heck, they won’t even broach that subject in Greece, which has already been left for dead and bailed out.
Monetarily the US is like Japan, and won’t default. In reality, thanks to politics, it might happen.