us aaa rating still under threat
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

US AAA rating still under threat

Arab Today, arab today

Arab Today, arab today US AAA rating still under threat

Washington - AFP

The United States could still faces an unprecedented downgrade of its triple-A credit rating, despite the government's last minute moves to avoid defaulting on its debt Tuesday.But even if powerful raters Standard & Poor's, Moody's and Fitch decide that Washington's growing deficit and debt are too big to merit their top grade, markets might not pay much attention.As expected, Moody's and Fitch both reaffirmed their AAA rating of US debt shortly after President Barack Obama signed Tuesday the bill that raised the country's borrowing ceiling -- without which the Treasury would have had to begin sharp spending cuts, and possibly default on debt payments.But both warned they were still studying the legislation's deficit-cutting measures to see if they were adequate.Moody's attached a "negative outlook" to its rating, warning that it still needs to see whether the country will actually pursue the $2.4 trillion in deficit cuts over 10 years as stipulated, and whether the economy remains strong enough to merit a AAA rating.S&P remained mum. On July 14, it warned of the 50-50 possibility of a downgrade within three months, even if the debt default threat was eliminated, because of the country's dark long-term fiscal profile.S&P officials said that a $4 trillion deficit reduction package would likely suffice to prevent a downgrade. By that measure, the legislation does not come close.The United States has held its AAA rating since 1917, and because the dollar and US Treasury bonds are so central to world trade and finance, a downgrade theoretically could rock the global economy."We are still vulnerable to a downgrade," said Carmen Reinhart, an economist with the Peterson Institute in Washington, calling the deficit plan "still tenuous on all areas."Nick Gartside, chief investment officer for global fixed income at JP Morgan, expects a downgrade because Washington's debt and deficit profile is "a huge anomaly" in the club of AAA countries."To our mind that means in time the US is likely to lose its triple-A rating," he said.Asked whether he thought the United States could protect its rating, even Treasury Secretary Timothy Geithner was not sure."I don't know. It's hard to tell," he told ABC television in an interview broadcast Tuesday.But others in the market either do not expect a downgrade or do not fear it.A Tuesday meeting of a private-sector committee that advises the Treasury on debt market conditions took both views, according to the Treasury."None of the members thought that a downgrade was imminent," it said.Committee members also said a rating cut would have little impact on demand for US debt, and some dismissed the raters as having low credibility, according to a Treasury official. Markets seemed to agree. US bond yields hit their lowest point of the year on Wednesday. "Perversely, I think the impact (of a downgrade) on the Treasury market could be quite limited," said Gartside. Still, the ultra-low yields on Treasuries were a sign of another problem that could cause a downgrade. They fell as investors dumped equities on worries that US economic growth had stalled and would not recover in the coming months. And indeed that was one of the variables cited by Moody's in its warning that a downgrade could still come. Aside from insisting the US government actively pursue deficit slashing as promised, it said more stagnant growth could undermine everything. Meanwhile some estimates say that, because of the dollar's dominant role in the global economy, a downgrade would not necessarily raise the government's cost of borrowing. But it would almost certainly also lead to a downgrade of other issuers of US government-backed debt, like that of financially shaky giant mortgage financiers Fannie Mae and Freddie Mac. And many argue that those bonds would be hit, ultimately costing the government itself more. The main issue is that no one knows for sure what will happen in a downgrade. "Uncertainty about market effects is high," said Goldman Sachs.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us aaa rating still under threat us aaa rating still under threat

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us aaa rating still under threat us aaa rating still under threat

 



GMT 10:06 2012 Saturday ,28 July

Querrey advances at ATP LA Open

GMT 21:15 2017 Thursday ,01 June

Trump condemns deadly Kabul explosion

GMT 02:15 2017 Thursday ,24 August

Is your country on the Qatar free entry list of 80?

GMT 19:48 2016 Monday ,03 October

Controversial boxing champ Tyson Fury retires

GMT 08:20 2015 Tuesday ,08 December

PC market woes show no sign of easing

GMT 17:27 2017 Tuesday ,25 April

20 Yemeni soldiers killed, injured in explosion

GMT 11:52 2017 Saturday ,30 December

OIC condemns Mar Mina Church attack

GMT 00:03 2017 Saturday ,25 March

Arab Meeting to Examine Anti-Corruption Methods

GMT 13:12 2017 Thursday ,20 April

Deputy premier meets Arab League chief

GMT 14:13 2014 Friday ,10 January

Opel Astra GTC

GMT 18:27 2016 Tuesday ,02 August

Turkish Foreign Minister arrives in Islamabad

GMT 11:27 2016 Tuesday ,13 December

Saudi woman arrested for challenging social norms
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday