Moody’s: We’re reviewing the U.S.’s Triple-A rating in light of default risk

posted at 7:50 pm on July 13, 2011 by Allahpundit

A shot across the bow.

Moody’s Investors Service said late Wednesday it placed the U.S. government’s triple-A bond rating on review for possible downgrade due to rising risk of default. “The review of the U.S. government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default,” Moody’s said. The rating agency stressed that it considers the probability of a default to be low but no longer minimal.

That’s from MarketWatch. Ironically, one of their own contributors argued yesterday that default is impossible because Treasury takes in much more revenue per month than it pays out in interest on debt. If Geithner had to, he could pay the interest, pay off all bonds that have come due, thereby lowering the country’s debt, and then reissue new debt back to the limit of the debt ceiling in order to generate new revenue. Moody’s is arguing, as I understand it, that there could be a brief default at the beginning of August because the U.S. wouldn’t have received enough monthly revenue yet in the first few days of the month to meet its obligations. That alone would be enough for a downgrade and consequent hikes in interest rates. And as MarketWatch’s contributor acknowledges, even meeting our debt obligations wouldn’t prevent an immediate and “chaotic” 44 percent cut in other government spending, with all of the systemic effects that entails. So yeah, a default wouldn’t last long, but it wouldn’t have to in order to do major damage.

Let’s go back to the McConnell plan for a minute, though. Below you’ll find Joe Scarborough, of all people, unloading on it as a total betrayal of the tea party. I agree that it’d be a horrible, horrible way to end the big debt-ceiling standoff. All I need now is for someone to give me a less horrible alternative. Is there one? Rich Lowry argues that the obvious move at this point would be for the House to pass its own debt-ceiling plan and pressure Obama to sign off on it as the clock ticks down. There’s just one problem:

By all accounts, several dozen Republicans are opposed to voting for any increase in the debt limit at all. This means Republicans don’t have 218 for anything. A friend of mine jokes, “I don’t think they even have 200 for anything.” This is why the only viable scenario right now for getting something through the House is a deal with the White House that most Republicans and a contingent of Democrats can support. Since that seems unlikely, it looks like we’re going to tick steadily down to August 2.

It may take some sort of disruption in the markets or in the operations of government to shake something lose. If that’s where we end up, who do you think will be blamed? If Republicans do take the blame, they’ll eventually crack and vote for a debt-limit increase in the worst possible circumstances. It’d be much better if they took the initiative now in a bid to avoid ending up in that fix or, if it comes to that, to place the blame on the Democrats. But they’re frozen in place by their own divisions.

Andrew Stiles estimates that there are 60 Republicans who could vote no on a deal, but I’m more interested in how many intend to vote no in principle on raising the ceiling no matter what sort of deal comes with it. (Bachmann, whose price is repealing ObamaCare, would count for these purposes since there’s no way that’s happening.) Is Boehner short of 218 on any and every potential compromise package? If so, then Democrats necessarily will dictate the terms of the final bill. Without them, nothing can pass. Some deal.

With that in mind, Dan Foster elegantly makes the case for the McConnell plan:

Ugly and unpleasant as it is, I frankly don’t find much in McConnell’s analysis to disagree with. There seems to be no plan, and no hopes for a plan, that can pass both the House of Representatives and the Senate. There is no deal to be had that is a deal worth having. In light of this truth, what is to be done?

Most conservatives — including three-quarters of our readers if the current results of the homepage poll are representative — would issue McConnell a “stand or die” order. Believe me, I understand the sentiment. But again, not all retreats are capitulations. McConnell clearly thinks of this as a tactical retreat in the service of his overarching strategic objective: to make President Obama a one-term president. You can hate the McConnell plan because you don’t share his overarching strategic objective — i.e., you think it is more important to stand on conservative principles, whatever the consequences, than it is to oust President Obama — or because you share McConnell’s strategic objective but you don’t think his choice of means will serve it. But neither is the same thing as hating the plan because it’s a “surrender.”

“There is no deal to be had that is a deal worth having.” If you doubt that that’s true, read Michael Tanner on how little how even the GOP’s proposal would accomplish in terms of deficit reduction. In a way, Obama’s been ahead of the curve on all of these dynamics, treating the debt ceiling less as an opportunity for a meaningful bargain than as a chance to position himself for next year as a pragmatic centrist. McConnell, realizing that nothing may be capable of passing the House, has now caught up and is playing Obama’s game with him. If this is all about positioning for next year and maximizing one’s numbers in Congress in order to pursue a real spending deal in 2013, then let’s make The One choke on his own fearmongering about default by handing him responsibility for the debt ceiling. It’s a cynical move, but then so is Obama’s maneuvering. One good turn deserves another.

Exit question: How about Kevin Williamson’s idea for a compromise plan? Raise the debt ceiling — but only just enough to finance our current debt service until we can reach a long-term plan.

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Do it, The dems have done NOTHING in years on the debt or budget. It is all theirs.
Do it. DO IT DO IT!!!!

ColdWarrior57 on July 13, 2011 at 7:53 PM

Boehner needs to pass the GOP version of the bill and put it all on Obama and the Democrats. If there is a default – it’s not because we didn’t produce a bill.

gophergirl on July 13, 2011 at 7:53 PM

Cut up the Credit card.

Its the only way they’ll learn.

portlandon on July 13, 2011 at 7:55 PM

Exit question: How about Kevin Williamson’s idea for a compromise plan? Raise the debt ceiling — but only just enough to finance our current debt service until we can reach a long-term plan.

Right, like we are going to reach a long term plan with the Dem’s who can’t even agree to pass a budget!

upinak on July 13, 2011 at 7:56 PM

If this is all about positioning for next year and maximizing one’s numbers in Congress in order to pursue a real spending deal in 2013, then let’s make The One choke on his own fearmongering about default by handing him responsibility for the debt ceiling. It’s a cynical move, but then so is Obama’s maneuvering. One good turn deserves another.

Indeed, sir. Indeed. Since he’s soooo smart and such a great leader, let him lead with his scrawny tail buck up against the debt ceiling, which, by the way, too high.

I have my own compromise bill. House votes to REDUCE the debt ceiling in exchange for a 10% tax on those who pay no income tax. Also, end the EIT credit for people who don’t pay federal income tax. Those people are literally robbing me blind.

SouthernGent on July 13, 2011 at 7:57 PM

For all, like me, who are inclined to respond and comment here: this is mental masturbation…i.e., it means nothing. Send your pithy, witty thoughts to your congress critters and Mr. Speaker. I just did.

Dingbat63 on July 13, 2011 at 7:57 PM

How very convenient for the Democrats that this came out now, isn’t it?

Colbyjack on July 13, 2011 at 7:57 PM

Do it, The dems have done NOTHING in years on the debt or budget. It is all theirs.
Do it. DO IT DO IT!!!!

ColdWarrior57 on July 13, 2011 at 7:53 PM

you remind me of my friend.. in Idaho. LOL

upinak on July 13, 2011 at 7:58 PM

that there could be a brief default at the beginning of August because the U.S. wouldn’t have received enough monthly revenue yet in the first few days of the month to meet its obligations.

Great. A superpower living paycheck to paycheck …

yo on July 13, 2011 at 7:58 PM

Deja Vu!!

Hank Paulson/ Bush 43……Fall 2008

Stimulus / etc 2009

Debt Ceiling fight last year.

Debt ceiling fight this year.

Americans can’t pull their mouths off the teet long enough to notice the Republic is crumbling around them.

PappyD61 on July 13, 2011 at 7:59 PM

I have my own compromise bill. House votes to REDUCE the debt ceiling in exchange for a 10% tax on those who pay no income tax. Also, end the EIT credit for people who don’t pay federal income tax. Those people are literally robbing me blind.

SouthernGent on July 13, 2011 at 7:57 PM

That’s a fantastic idea. They are all about fair share – let’s go after the people who pay nothing!

gophergirl on July 13, 2011 at 7:59 PM


Moody’s: We’re reviewing the U.S.’s Triple-A rating in light of default risk

White House propaganda.

Knucklehead on July 13, 2011 at 8:00 PM

The federal budget deficit is on track to top $1 trillion for the third straight year. The government said the deficit in the first nine months of the budget year 2011 was $971 billion. The gap will probably top last year’s $1.29 trillion, but come in less than the record deficit of $1.41 trillion in 2009. Anyone who thinks someone in Washington can change this is nuts. Balanced budget amendment or bust.

MJZZZ on July 13, 2011 at 8:00 PM

well upinak, I sure in the hell hope you meant that as a compliment to me and not an insult to your friend!!!!
ROFLMAO!!!

ColdWarrior57 on July 13, 2011 at 8:01 PM

Moody’s is like the CBO – they don’t estimate speeches.

In the real world, we know the consequences of debt ad infinitum are not terribly different from the consequences of default (which, again, would only happen if Obama orders it).

Whether we hit the fake debt ceiling in August or continue our slow-motion crash into the real debt ceiling, the consequences are the inability to borrow money to pay for the government’s obligations.

HitNRun on July 13, 2011 at 8:01 PM

The review of the U.S. government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes.

Hackery.

Count to 10 on July 13, 2011 at 8:02 PM

The good news is that we can’t control any of this.

We did our job by voting in conservative candidates.

Now sit back and enjoy the show.

faraway on July 13, 2011 at 8:03 PM

Gold $ 2000

PatriotRider on July 13, 2011 at 8:03 PM

well upinak, I sure in the hell hope you meant that as a compliment to me and not an insult to your friend!!!!
ROFLMAO!!!

ColdWarrior57 on July 13, 2011 at 8:01 PM

no, he is good peoples and has the same cold name. But I always screw up the number. *sighs*

upinak on July 13, 2011 at 8:04 PM

Boehner needs to pass the GOP version of the bill and put it all on Obama and the Democrats. If there is a default – it’s not because we didn’t produce a bill.

gophergirl on July 13, 2011 at 7:53 PM

That’s exactly what the Fox panel said for them to do tonight. Put it on the floor of the House, it passes and let Dingy Harry and President Pantywaist choke on it.

Knucklehead on July 13, 2011 at 8:04 PM

wouldn’t prevent an immediate and “chaotic” 44 percent cut in other government spending, with all of the systemic effects that entails.

What systemic effects?

Count to 10 on July 13, 2011 at 8:07 PM

Boehner needs to pass the GOP version of the bill and put it all on Obama and the Democrats. If there is a default – it’s not because we didn’t produce a bill.

gophergirl on July 13, 2011 at 7:53 PM

This is what should be done, but as AP explained above, Boehner does not have enough GOP votes in the House to votes to do this.

Mark1971 on July 13, 2011 at 8:07 PM

How very convenient for the Democrats that this came out now, isn’t it?
Colbyjack on July 13, 2011 at 7:57 PM

I had the same thought. The timing is . . . curious.

conservative pilgrim on July 13, 2011 at 8:10 PM

I think Moody’s just printed a form letter that Geithner sent them this morning. Judging from the way gold reacted, Geithner and Bernanke both are long on gold and are funding their retirement package for after the 2012 election.

MJZZZ on July 13, 2011 at 8:11 PM

Moody’s: We’re reviewing the U.S.’s Triple-A rating in light of default risk

White House propaganda.

Knucklehead on July 13, 2011 at 8:00 PM

Yep, I’m very suspicious of Moody’s in this regard. They are smart enough to know that not raising the debt limit does not mean default. It looks to me like Moody’s statement was written by little Timmie and Asholerod.

slickwillie2001 on July 13, 2011 at 8:11 PM

Seriously, as others have said, the House needs to pass the cuts and the debt ceiling deal they want with NO NEW TAXES and put it on the DemoRATs in the Senate and our bumbling idiot of a president’s heads. They got us into this mess, racking up all the new spending over the last 6 years, they need to OWN IT!

jawkneemusic on July 13, 2011 at 8:12 PM

If a default happens, I wouldn’t put it past Obama to declare for himself the power to raise the debt ceiling by executive order; they’ve already floated this argument. This is just a less bloody way to seize power, even getting McConnell to believe that the idea was his!

RedRedRice on July 13, 2011 at 8:14 PM

Apparently Obama has stormed out of the debt talks tonight. And check out these wonderful statments:

Update: OBAMA: “THIS MAY BRING MY PRESIDENCY DOWN BUT I WILL NOT YIELD ON THIS” — REPUBLICAN AIDE; Perhaps Obama may want to put the country ahead of his own interests this one time…

•Cantor relayed this quote: “Eric, don’t call my bluff,” Obama said. “I’m going to take this to the American people.”
•More Cantor: Obama said that the group has until Friday to figure out “which way we’re going.” They’ll meet tomorrow

.

Weight of Glory on July 13, 2011 at 8:16 PM

How about we SHUT IT DOWN!

GarandFan on July 13, 2011 at 8:17 PM

We’re screwed because at least 80% of the country buys into the socialist mindset. Even a good number of “conservatives” when polled are still in love with Social Security and Medicare. The nation just does not believe in limited government, it appears..thus politicians, even genuine conservatives do not have the guts to do what is necessary in terms of spending reduction and cutting back the government…

therightwinger on July 13, 2011 at 8:18 PM

So AP, resident lawyer, the concern that McDonnell’s plan isn’t constitution is overblown?

Cindy Munford on July 13, 2011 at 8:18 PM

Moody’s: We’re reviewing the U.S.’s Triple-A rating in light of default risk
White House propaganda.

Knucklehead on July 13, 2011 at 8:00 PM

Got that right.

Listen, there is enough in receivables to service the debt, pay the entitlements and have enough left over to MAKE THE DEMS stop spending.

Let’s start with stimulus funds that might still have some claw back potential.

Like these crazy effin’ projects: Scroll down.

Stop spending.

Key West Reader on July 13, 2011 at 8:18 PM

Is moody’s in the pocket of spooky dude too? I don’t have faith in what is coming out of the news from the msm and the wh. Both are trying to scare the daylights out of American’s to demand we let bho and the d’s do as they dang well please. Well people, let us for once think about us and our future! If only we can get the r’s in dc to think about us also.
L

letget on July 13, 2011 at 8:19 PM

I wonder if they were “encouraged” to issue that statement today?

huckleberryfriend on July 13, 2011 at 8:20 PM

Weight of Glory on July 13, 2011 at 8:16 PM

He sounds like a freaking 2 year old having a tantrum.

gophergirl on July 13, 2011 at 8:20 PM

How about we SHUT IT DOWN!

GarandFan on July 13, 2011 at 8:17 PM

There has got to be someone, maybe Rubio, with a reasoned voice and demeanor that can step up to the lecturn (without a teleprompter) and explain very clearly, that a government “shutdown” doesn’t mean that everything comes to a grinding halt.

Our Seniors, Military, Vets and Disabled will get their checks. We will have to shut down things like the zoo, the library, the parks, and OMG the post office on a Saturday.

He could remind America that the dems failed to pass a budget for almost 3 years, and this is why we are standing here today.

Key West Reader on July 13, 2011 at 8:21 PM

Also, watch the markets tomorrow. They could crash given this news. HOWEVER, markets have not been operating along normal conditions for over a year and are way over bought. Remember, the FED has infused the markets with over 700 billion in asset purchases, which has floated the markets higher and higher on piss poor economic data. The markets rallied some 600 pnts in a week and a half last month, for example, on nothing but Greece voting to accept bailout money. Just keep all that in mind if and when Obama begins to blame any drop in the market on Republicans.

Weight of Glory on July 13, 2011 at 8:22 PM

He sounds like a freaking 2 year old having a tantrum.

gophergirl on July 13, 2011 at 8:20 PM

Indeed. A two year old with 1/3 of the US government.

Weight of Glory on July 13, 2011 at 8:23 PM

We’re screwed because at least 80% of the country buys into the socialist mindset.

No they don’t. The GOP didn’t attain historic victories in 2010 buy getting a bunch of socialists to vote for them. I agree with you things look grim. But they are not as scary as you say. We can get through this, the GOP just needs to stand firm.

jawkneemusic on July 13, 2011 at 8:24 PM

Just a question. Who would you get to know better, someone whom you worked with on a project for a few days in a single week or two or someone whom you worked with for a couple of hours each day over a whole year?

Putting that principle to work, the House needs to pass a one-month debt increase coupled with an immediate, specific cut of $100b in spending for that month. The Senate may or may not go along, but the votes will be recorded and, if they do pass it, Obama will have to either sign or veto it, thus either agreeing to the cuts or throwing us into default. Blood off or on his hands.

The next month, do the same with some additional cuts.

Then, rinse and repeat if necessary. Above all, quit the fu*k playing defense.

TXUS on July 13, 2011 at 8:26 PM

I question the timing…

d1carter on July 13, 2011 at 8:27 PM

Nice job, ahole Obama.

Even that fact that Moody’s is looking into this is bad enough, we should be the nation which is never even considered as needing a serious review.

Thank you, 52%’ers, thank you for voting this effin FOOL into the White House. Go throw some shoes at yourselves.

Bishop on July 13, 2011 at 8:28 PM

McConnell is right… the most important thing to do is to make sure that in the minds of the people Obama keeps ownership of the economy until the election.

ninjapirate on July 13, 2011 at 8:29 PM

We’re screwed because at least 80% of the country buys into the socialist mindset…

therightwinger on July 13, 2011 at 8:18 PM

No. 20% believe in Socialism; that group is made up of public fund recipients, progressives, unions and code pink. So please, don’t be delusional.

We are up against a tiny, extremely vocal minority of extremists.

Key West Reader on July 13, 2011 at 8:29 PM

They threaten to downgrade the U.S. rating unless the U.S. borrows more money from them… Odd.

equanimous on July 13, 2011 at 8:31 PM

The GOP has to pass a bill that raises the debt limit but cuts 3X as much spending. Yes, die on the hill against tax increases. But dying on the hill against raising the debt will spell political doom if even a bit of hell breaks loose next month.

angryed on July 13, 2011 at 8:31 PM

equanimous on July 13, 2011 at 8:31 PM

from them

equanimous on July 13, 2011 at 8:32 PM

They threaten to downgrade the U.S. rating unless the U.S. borrows more money from them… Odd.

equanimous on July 13, 2011 at 8:31 PM

Moody’s is a bond rating company, not a lender. The US doesn’t borrow from Moody’s. In fact nobody borrows from Moody’s since Moody’s doesn’t lend money.

angryed on July 13, 2011 at 8:32 PM

Moody’s doesn’t lend money.

angryed on July 13, 2011 at 8:32 PM

They are a rating agency and shouldn’t be taken for granted. However, like most, and given the deplorable behavior of this administration and its octopus like arms? I would not be surprised if they are getting a bit of the arm twist to support an agenda.

Key West Reader on July 13, 2011 at 8:34 PM

They are a rating agency and shouldn’t be taken for granted. However, like most, and given the deplorable behavior of this administration and its octopus like arms? I would not be surprised if they are getting a bit of the arm twist to support an agenda.

Key West Reader on July 13, 2011 at 8:34 PM

That’s a nice rating agency you have there, would be a shame if something were to happen to it.

angryed on July 13, 2011 at 8:38 PM

But dying on the hill against raising the debt will spell political doom if even a bit of hell breaks loose next month.

angryed on July 13, 2011 at 8:31 PM

Here’s the funny thing. No hell is going to break loose; there is no armageddon scenario unless you want to put any degree of plausibility into Tiny Tim and BHO.

So what? We shut down the parks and museums, suspend the mail service, furlough some personnel. Here’s the good thing: Those that are sent on furlough are those that can be eliminated as non-essential personnel.

So let’s start there. “Non Essential”

Key West Reader on July 13, 2011 at 8:38 PM

angryed on July 13, 2011 at 8:32 PM

yeh i caught that myself the second I posted it :)

equanimous on July 13, 2011 at 8:32 PM

equanimous on July 13, 2011 at 8:39 PM

I have my own compromise bill. House votes to REDUCE the debt ceiling in exchange for a 10% tax on those who pay no income tax. Also, end the EIT credit for people who don’t pay federal income tax.

SouthernGent on July 13, 2011 at 7:57 PM

8-D

lOVE IT!

Shay on July 13, 2011 at 8:44 PM

Chance of a US downgrade? Zero.

InDubly on July 13, 2011 at 8:45 PM

Chance of a US downgrade? Zero.

InDubly on July 13, 2011 at 8:45 PM

exactly…

equanimous on July 13, 2011 at 8:45 PM

These are the same idiots that orchestrated the 2008 financial crisis for political gain. You know they thought they could right the ship after the election and take credit but the thing snowballed like a mother and got totally out of their control.

Maybe I’m paranoid but this feels kind of the same.

mrsmwp on July 13, 2011 at 8:47 PM

This is what should be done, but as AP explained above, Boehner does not have enough GOP votes in the House to votes to do this.

Mark1971 on July 13, 2011 at 8:07 PM

Boehner WILL have enough GOP votes to pass a debt limit increase in the House provided he attaches actual spending cuts (not the gimmicky $2T over 10yrs) and a deficit reduction plan.

Conservatives/Tea partiers are not some “head in the clouds” idealists who refuse to reason and face reality, as the media/Dems/RINOs paint us. We are tired of the Beltway politics-as-usual that is always quick to spend and tax but refuses to prune down the size of Govt!

TheRightMan on July 13, 2011 at 8:49 PM

Add to my last comment:

“… deficit- and debt-reduction plan”

TheRightMan on July 13, 2011 at 8:50 PM

… I would not be surprised if they are getting a bit of the arm twist to support an agenda.

Key West Reader on July 13, 2011 at 8:34 PM

Yep, part of the same crowd that told us if TARP doesn’t get passed, it was going to be lights out and then ended up making more money than even before the recession.

TheRightMan on July 13, 2011 at 8:53 PM

TheRightMan on July 13, 2011 at 8:49 PM

I hope you’re right, I really do. But I have my doubts.

Mark1971 on July 13, 2011 at 8:54 PM

Have I missed a single GOP candidate for President asking the question…

“How do you default when you have enough money to pay your bills?”

… If I did, linky please.

Seven Percent Solution on July 13, 2011 at 8:56 PM

Palin on Hannity right now…!

Seven Percent Solution on July 13, 2011 at 9:03 PM

I bet any amount that the WH had a hand in the Moody’s rating…explain to me how borrowing more money to pay your existing debt improves your credit standing?

rich8450 on July 13, 2011 at 9:07 PM

Obama-the gift that keeps on giving. A high price we’ve paid for being “stylish”.

Sinatra sang ‘There used To Be A Ballpark’… any volunteers for ‘There Used To Be A Country’?

MaiDee on July 13, 2011 at 9:14 PM

These are the same idiots that orchestrated the 2008 financial crisis for political gain. You know they thought they could right the ship after the election and take credit but the thing snowballed like a mother and got totally out of their control.

Maybe I’m paranoid but this feels kind of the same.

mrsmwp on July 13, 2011 at 8:47 PM

Yep, I believe that as well. It started when Chuck Schumer brought down Indymac.

slickwillie2001 on July 13, 2011 at 9:15 PM

By all accounts, several dozen Republicans are opposed to voting for any increase in the debt limit at all. This means Republicans don’t have 218 for anything.

Are you KIDDING ME?! THIS is the reason we haven’t passed our own debt ceiling legislation and let Obama sweat it out?! The stupid “TRUE CONSERVATIVE PATRIOTS” are playing hardball?!

I swear to God this movement would cut off its nose to spite its face.

Caiwyn on July 13, 2011 at 9:16 PM

Default is God’s way of telling you that you spent too much money!

Emperor Norton on July 13, 2011 at 9:21 PM

McConnell’s plan puts the ball in Obama’s court and makes him- and Democrats- own the debt ceiling increases 100%.

Is it what conservatives wanted out of these talks? No- but I think that as the clock ticks down, it’s actually a worthwhile tactic- Obama is going to spin that the crisis is all the fault of the GOP, he’s going to lie and lie and lie about how post-partisan and moderate he is, how he tried to make a deal but the evil Republicans would have none of it.

And the problem is the media is going to repeat the lies, unquestioningly, over and over again until an awful lot of Americans believe it. The GOP can’t compete with that- and they seem to have zero ability to explain these issues clearly and simply to the public at large.

The choices left now, as I see it, are either to be painted into a corner by the crisis and a desperately lying Obama and media and accept a lousy deal that will give Obama a boost and destroy conservatives’ view of the GOP….or they can adopt the McConnell plan and let Obama take ownership of it.

If there’s another option that won’t damage the GOP in some way I’m not aware of it.

Jay Mac on July 13, 2011 at 9:39 PM

White House propaganda.

Knucklehead on July 13, 2011 at 8:00 PM

This cannot be repeated enough.

Remember this from December 18, 2009?

Moody’s: The Housing Market Has Bottomed

Fallon on July 13, 2011 at 9:40 PM

Chance of a US downgrade? Zero.

InDubly on July 13, 2011 at 8:45 PM

Indubitably. I would be heartily surprised if they haven’t received at least one message to the effect of “downgrading could be hazardous to your health.”

Uncle Sams Nephew on July 13, 2011 at 10:24 PM

If the GOP supports an increase in the debt ceiling, I won’t vote for the GOP. I don’t think I’m alone in that. The GOP establishment is flirting with the demise of the GOP.

Bugler on July 13, 2011 at 11:02 PM

It really is hard not to be suspicious about the timing of this proclamation from Moody’s.

Someone else pointed out that default isn’t inevitable if the debt ceiling isn’t raised; it’s equally valid to point out that raising the debt ceiling isn’t the only method — it’s not even the best method — of putting the US fisc back on on a AAA+ course.

Something seems to be afoot, although it’s not clear what. It seems very unlikely that there’s no relation between Moody’s announcement today and an interesting event in the world of named-n-shamed mortgage-fiasco culprits.

MBIA, the bond insurance giant whose Moody’s rating was heavily politicized in 2007-8, has had a drawn-out lawsuit against Bank of America/Merrill Lynch over allegations that Merrill Lynch misrepresented mortgage-security risk data before the big collapse.

Moody’s kept MBIA’s rating at AAA well past the tolerance of industry observers, and then downgraded it in a rapid series of moves in 2008, a major factor in the credit crisis that fall. Moody’s employees later alleged misconduct by the firm during this period.

Today, 13 July, MBIA has dropped the lawsuit against BofA with no explanation of why.

Given the revolving door for senior employees among these companies and the federal government, and the obviously political character of the Moody’s announcement, it’s hard not to suspect somebody’s lining up something. Guess we need Glenn Beck’s research team to figure out what.

J.E. Dyer on July 14, 2011 at 2:18 AM

Hey Moody. How them bundled Fannie May and Freddie Mac mortgage funds doing? How about the Argentine government bonds? And how about the Chinese funny paper?
Throw these jackasses in jail.
This is arbitrage and these jackals should be hunted down and thrown in jail as they have deserved for years. Hard labor. Along with Rubin. Bush failed because his Treasury Secretary was one of them. They are criminals.

pat on July 14, 2011 at 2:28 AM

All the more reason to stop spending money we don’t have. Maybe Moody’s could give our grade the same treatment the Atlanta school admin used to uplift the grades of their students.

Kissmygrits on July 14, 2011 at 9:31 AM