tazzietiger
Premiership Player
- Sep 10, 2010
- 4,808
- 508
- AFL Club
- Richmond
- Thread starter
- #76
It seems the house doesn't have the republican votes to pass the senate deal on lifting that the ceiling until feb and govt reopened until January.
Also Fitch credit rating could downgrade their rating on the u.s debt.
Also Fitch credit rating could downgrade their rating on the u.s debt.
Fitch could strip America of its prized "AAA" credit rating within weeks, the rating agency has warned, amid heightening fears that the world’s largest economy is headed for a default.
The ratings agency believes the country will raise its $16.7trn debt ceiling in time to ensure it can keep up with interest payments on its soveriegn debt, but said the ongoing political stand-off in Washington was “casting doubt over the full faith and credit of the US” regardless.
If the US does default, Fitch warned it would downgrade American bonds from AAA to B+, the highest rating it will award any security that defaults but is expected to make a “swift full or near recovery”.
American bonds are regarded as the safest government debt in the world, and are often used as an laternative to cash, so any downgrade of this kind would send shockwaves throughout the global system.
The prolonged negotiations risk “undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US,” Fitch said in a statement.
America has already been relying on “extraordinary” measures to pay its bills, so the drawn out negotiations also impact the country’s credit rating by reducing its “financing flexibility,” Fitch said.
“Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritise debt service, and it is unclear whether it even has the legal authority to do so.”
“The US risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of US sovereign creditworthiness and the economy.”
http://www.telegraph.co.uk/finance/...ns-to-strip-America-of-AAA-credit-rating.html