PIMCO has seen enough of the federal government’s “fiscal theatre” and now says the U.S.’s credit rating will inevitably be slashed, Bloomberg’s Tracy Withers reports.”The U.S. will get downgraded, it’s a question of when,” Withers quotes Scott Mather, Pimco’s head of global portfolio management, as saying. “It depends on what the end of the year looks like, but it could be fairly soon after that.”
If President Obama is reelected, Mather said, it’s likely resolution of the country’s deficit “doesn’t happen in a nice way, and we have disruption in the marketplace,” he said.
Any agreement will likely lower economic growth by about 1.5 percentage points next year, Mather said.
But they may roil markets by discussing scenarios that would lead to a 4.5 percentage-point fiscal drag, he said.
Click here for Withers’ full report on Bloomberg.com >
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