As possible financial Armageddon looms in the shape of warring American politicians, many are asking what happens if the worst - a default by the US on its debt - is avoided, but the country still loses its prized triple-A credit rating?
WASHINGTON (AP) — Most Americans think jarring economic problems will erupt if lawmakers fail to increase the government's borrowing limit. Yet they're torn over how or even whether to raise it, leaning toward Republican demands that any boost be accompanied by spending cuts. According to an Associated Press-GfK poll, 53 percent say that if the debt limit is not extended and the U.S. defaults, the country will face a major economic crisis. An additional 27 percent say such a crisis would be somewhat likely, while just 17 percent largely dismiss the prospects of such damage.
By Plan B Economics:It may not happen next week, but it will happen. It appears that Japan is on an unstoppable path to financial Armageddon.Over the past 20+ years, the Japanese economy has unwound the excesses caused by a giant property and financial bubble. At the same time, the country's aging demographics has increased social costs while the pool of taxable labor declined. Consequently, Japan has stagnated and repeatedly dipped into deflation.
Moody’s Investor Service, the credit rating agency, will fire a warning shot at the US, saying that unless the country gets public finances into better shape than the Obama administration projects there would be ‘downward pressure’ on its triple A credit rating.
Marshall Auerback submits:
By Marshall Auerback
So ratings agency Standard & Poor’s revised the U.S. rating outlook to negative from stable after affirming its sovereign rating at AAA/A-1+ sovereign credit ratings. Why people give credibility to the organization that gave us “triple AAA rated” subprime toxic garbage is beyond me. And take a look at the history: Debt downgrades had no impact on Japan when Moody’s and S&P tried to pull the same stunt with them.