New York — Just imagine Greece, Spain, Iceland, Ireland or Italy is facing a Parliament-instigated government shutdown within hours and a serious probability that its Parliament would refuse to raise its debt ceiling thereby defaulting on its government bonds. What do you think would happen at once to its Standard & Poor’s, Moody’s and Fitch ratings?
Yet this dire situation has been facing the U.S., and it’s now zero hour. Yet miracle of miracles, it has not affected the U.S. ratings by the major rating agencies by even one notch.
According to a Reuter’s story, “(A) debt ceiling impasse and a government shutdown are unlikely to affect the U.S. sovereign rating, a Moody’s analyst told Reuters, because the agency is focused on the long-term debt outlook.”
The Moody’s analyst goes through contortions in this article to explain why this is so.
“At this time we don’t see that (rating cut) as a consequence of these short-term events,” said Steven Hess, Moody’s lead U.S. sovereign credit analyst.”
“The rating is based more on the longterm outlook for the debt, rather than what we think will be short-term events,” Hess added.
Analysis: This U.S. government shutdown and the very likely refusal to raise the U.S. debt ceiling are a reflection of protracted systemic problems in the U.S. government and political system. We have a Republican Party, one of the two major ruling parties, which has no qualms about holding the U.S. debt ceiling hostage every time it has to be raised. We have political paralysis and stalemate which is not going to go away anytime soon. If, as Moody’s claim, its rating of the U.S. is based on “the longterm outlook for the debt,” all any sober, rational person can say and see is, the longterm outlook is very dire and grave indeed. And that’s not even pointing out that many major U.S. states with economies bigger than Greece are basically insolvent, broke.
According to the same Reuters article, “Moody’s also expects the United States to keep paying interest on Treasuries in the event of a debt ceiling standoff, Hess added.”
Question: How can the U.S. keep paying interest on U.S. Treaury bills if the debt ceiling is not raised by Congress?!! How when the U.S. Treaury has run out of money?!!
“The U.S. Treasury bond is the benchmark of the world’s financial market,” Hess said. “To default on that would create a global financial problem.”
Translation: In other words, it’s a matter of belief and faith. The U.S. won’t default because that would create global financial consternation and panic.
CONCLUSION: This proves beyond the shadow of a doubt the brazen bias of the U.S. ratings agencies Standard & Poor’s, Moody’s, Fitch. They have one standard for Greece, Spain, Italy, France, Ireland, Iceland, and another standard for the United States. The looming U.S. government shutdown and debt ceiling crisis prove beyond the shadow of a doubt how utterly rigged the New World Order and Globalization are by the United States which created all the institutions like Standard & Poor’s and Moody’s.
It is a cruel joke for Greece, Spain, Italy, Ireland, Iceland, and indeed the rest of the world that Standard & Poor’s still rates the U.S. government bonds AA-plus (“excellent”). Moody’s and Fitch are even more unconscionable. They both still rate the United States AAA (triple A). When the U.S. is facing Government Shutdown and Default.
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