Thursday, February 5, 2009

Moody's On U.S.: AAA Stable.... For Now

Moody's noted earlier that the U.S.' AAA rating is stable for now, although it is not clear how the government's interventions in the financial markets and economic stimuli will affect the deteriorating financial position. U.S. Treasuries issued to the public are "most certain" to be paid, wrote Steven Hess, Moody's senior credit officer, in a research report. If that isn't a good example of diplomacy and watching out for one's career, nothing is.

The government had $5.8 trillion in debt held by the public at the end of 2008, the rating agency said, which seems a tad low for the real figure which is in the $10 trillion + range, but you can't go from abacus to excel in a day... The government's ratio of debt to gross domestic product, and debt and interest payments to federal revenue, will rise to levels that are high for a country rated Aaa-rated. "Whether in 2010 or after, interest rates are almost certain to rise from their current low levels and the affordability of the federal government debt will deteriorate," analysts said. Additionally, it's difficult to determine the impact of purchases of preferred stock of housing agencies Freddie Mac and Fannie Mae, any purchases under the Troubled Asset Relief Program or other capital provided to banks.

Actually guys, it really is not that difficult, but last thing you want to do is have to call the NY unemployment hotline right now, so we'll all read between the lines.

The Moodyfolk added "structural fundamentals, political stability, and still favorable post-crisis economic prospects support the stable outlook for the Aaa ratings of the United States."

In other news, Bill Gross keeps pounding the table that unless the U.S. buys several trillion of assets (again preferrably bonds that he owns), there will be a mini-depression. Sphere: Related Content
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