Moody's Sees US Rating Under Pressure After $3.8 Trillion Budget
If there is one thing the rating agencies can be proud of, it is... well, there isn't one. And if after yesterday's mindboggling budget proposal which sees the deficit increasing to $9 trillion in 10 years, coupled with the fact that GSE liabilities now should be counted as part of overall US obligations, neither S&P nor Moody's could muster enough courage to at least put the US on even the weakest form of downgrade review, one can say that after 2 years of pretending otherwise, both rating agencies are still as [clueless/corrupt] as always. Then one barely visible silver lining, the following disclosure from Moody's in the report released today:
The ratios of general government debt to GDP and to
revenue are deteriorating sharply, and after the crisis they
are likely to be higher than the ratios of other Aaa-rated
If the current upward trend in government debt were to
continue and become irreversible, the rating could come under
downward pressure. The trend and the outlook would be more
important than any particular level of debt.
IF it becomes irreversible? We wonder what would happen to Moody's U.S. models if they were to plug in 10% or even 5% blended interest rates. The ensuing explosion would likely be sufficient, if not to restore any credibility in the Deep "Throat" Shah-ridden organization, then to at least accelerate Buffett's full disposition of any remaining holdings of MCO shareshe may be stupid enough to still be in possession of.