World Clock

Thursday, 24 February 2011

US Government Shutdown - Unlikely

The US is dangerously close to the Congressionally mandated debt ceiling. So close in fact that it will only take another $200bn in spending to reach the US debt ceiling of $14,300bn. This may sound like a lot but it only equates to roughly 2 months of spending.

This will no doubt expedite proceedings when lawmakers continue to debate the recently published US budget for 2011-2012 from the OMB

On Thursday Moody's Investor Services offered its analysis of the potential for a downgrade to the United States Triple-A Sovereign Debt rating. 

Moody's today, has effectively issued a warning to US lawmakers to stand up and take note of their current fiscal situation. 

However, Moody's maintains a relaxed approach saying "The rating is very unlikely to be downgraded in advance of a debt-ceiling driven default, since a missed payment would only result, in our opinion, form an astonishing miscalculation by the government."

Analyst also state that "there is a extremely high probability that there will be a political compromise".

Finally Moody's also says it only places ratings on review for a possible downgrade if there is more than a 25% chance that occurring - this would only happen in the case where both sides of the aisle [Republicans & Democrats] were unable to agree - default at this point would then become probable.

If Moody's did lower the US Sovereign Debt rating this would substantially increase the interests that the US currently pays on its debt. 

Largest US debt holders can be seen here in a slide show courtesy of CNBC: 

Track the debt ceiling in real-time here:

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