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US 'AAA' credit rating to stand - on shaky ground

The three major credit rating agencies have confirmed the US AAA grade after tense debt limit negotiations, but the deal merely put Washington on borrowed time and more borrowed cash.

After having been under review for a possible downgrade by Moody’s, Standard & Poor’s and Fitch rating agencies, US lawmakers temporarily fended off threats by raising the debt ceiling on August 2.

Moody’s Investors Service confirmed that the US would maintain its current score, however, branded it with a “negative outlook.”

Likewise, Standard & Poor’s reaffirmed the highest rating, but had already assigned a negative outlook on April 18 and on July 14 it put the United States government on “credit watch negative.” The “credit watch negative” status shortens the time horizon allotted to the US government for getting its financial matters in order.

Fitch, the smallest of the three agencies affirmed the rating, but claimed that US fiscal trends and policy steps are “not consistent with the United States retaining its ‘AAA’ rating.”

The future of the US economic health alongside the policy steps will determine the course on the fragile ground which the ratings now stand. The US government is expected to tackle its financial matters by bringing the debt-to-GDP ratio down, state the rating agencies.

Moody’s top analyst claimed that, if growth does not see considerable improvement, the whole process of fiscal consolidation would be made very difficult. Such events may then transpire in form of a credit rating downgrade, casting another evil spell of economic curses on the US.

The US has relished a perfect credit score since 1917 when Moody’s was first established and has since come to depend on its persistence.

The consequences of Washington lawmakers failing to raise the debt limit on August 2 would have rendered the United States incapable of paying its debts and likely resulted in at least one of the three major credit rating agencies demoting the “bulletproof” US credit score for the first time in history.

Washington lawmakers have managed a very modest victory by making a bipartisan agreement to raise the debt ceiling and keep the US safe from an immediate rating downgrade. The dangers of a  tarnished rating, however, lurk from every direction and preventing them may be more than the US can polish off with borrowed cash.