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The credit ratings agency cautioned that if the US were to grow at slower pace levels than expected, the largest economy in the world’s already-extended finances could be over-stretched, in turn damaging its AAA credit rating.Were the US to lose its AAA rating, it could cause further financial damage, by increasing the cost of borrowing money, a necessary evil for a country predicted to have a $1.56 trillion (£980bn) budget deficit this year. The warning comes hot on the heels of a similar warning to the UK in mid-January, when Moody’s Pierre Cailleteau, head of sovereign ratings, said the UK needed a budget plan in order to ensure it keeps its high-grade debt status.However the warning against the US may come as a surprise, given it comes just six weeks after Moody’s said it had no plans to lower the US’s debt rating, with the agency saying that ‘the outlook is stable.’"Economic growth is very important to our assessment (of the sovereign rating)," Steven Hess, Moody’s senior credit officer in its sovereign risk division, told Reuters. ...
The U.S. government "will never" lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.
Kind of off topic, but this reminded me of the story from last year of $135B in US Bonds being seized in Italy. That story dropped from the headlines, and I never heard if they were counterfeit or if some country was trying to dump them.
It was quite a spectacle. If I remember right, the Italian authorities stated that they were real. American authorities declared that they were certainly fake and actually stated that it's Italy, the Mafia must be up to no good! Japan officially was silent, and the identities of the Japanese guys were not confirmed. Than, Italy released them, and everyone just said... please go away-nothing to see here.
Geithner says in an interview broadcast Sunday that in times of economic crisis, international investors will continue to buy U.S. Treasury bonds...FoxnewsI really found Geithners comments to the Moody's warning quite startling. Rome can't fall... because it's Rome... duh! Next question!!!
Move Over China: Beijing Sells Whopping $34.2 Billion Treasuries In December As Japan Becomes Largest Official Holder Of US DebtSubmitted by Tyler Durden on 02/16/2010 09:29 -0500Department of the Treasury Japan United Kingdom Gradually we are getting confirmation that Chinese "posturing" about offloading US debt is all too real. The most recent TIC data confirmed the Treasury's greatest nightmare: China is now dumping US bonds. In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion. Also, very oddly, the surge in UK holding continues, providing yet another clue as to the identity if the "direct bidder" - as we first assumed, these are merely UK centers transacting primarily on behalf of China as well as hedge funds, which are accumulating US debt under the radar. UK holdings increased from $230.7 billion to $302.5 billion in December: a stunning $70 billion increase in a two month span. Yet, with the identity of the UK-based buyers a secret, it really could be anyone... Anyone with very deep pockets.
