Moodys says Obama is wrong about raising debt ceiling
Forum rules
Be Civil. Go Hokies.
Be Civil. Go Hokies.
- UpstateSCHokie
- Posts: 11952
- Joined: Thu Aug 22, 2013 11:31 pm
Moodys says Obama is wrong about raising debt ceiling
Moody's offers different view on debt limit
One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.
The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”
The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.
“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.
Treasury Department officials did not immediately respond to requests for comment.
http://www.washingtonpost.com/blogs/pos ... 7c5c814d82
One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.
The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”
The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.
“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.
Treasury Department officials did not immediately respond to requests for comment.
http://www.washingtonpost.com/blogs/pos ... 7c5c814d82
“Those who can make you believe absurdities can make you commit atrocities.” ― Voltaire (1694 – 1778)
- awesome guy
- Posts: 54187
- Joined: Wed Aug 21, 2013 7:10 pm
- Party: After 10
- Location: Plastic Flotilla:Location Classified
Re: Moodys says Obama is wrong about raising debt ceiling
Moodys are GOP hacks!</H2>
Unvaccinated,. mask free, and still alive.
Re: Moodys says Obama is wrong about raising debt ceiling
Lew (the Treasury Secretary), JP Morgan and others agree. The question is the exact date. JP Morgan estimates it as the 24th, others say November 1.UpstateSCHokie wrote:Moody's offers different view on debt limit
One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.
The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”
The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.
“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.
Treasury Department officials did not immediately respond to requests for comment.
http://www.washingtonpost.com/blogs/pos ... 7c5c814d82
People who know, know.
Re: Moodys says Obama is wrong about raising debt ceiling
Furthermore, markets are pricing a some probability of default (see previous post) as can be seen by the inverted yield curve on US credit default swaps. The rate has increased significantly over the last two weeks.
People who know, know.
-
- Posts: 11324
- Joined: Thu Aug 22, 2013 8:48 pm
Re: Moodys says Obama is wrong about raising debt ceiling
By "wrong," do they mean lying Marxist pos?
UpstateSCHokie wrote:Moody's offers different view on debt limit
One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.
In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.
Not so, Moody’s says in the memo dated Oct. 7.
” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.
The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”
The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.
“The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.
Treasury Department officials did not immediately respond to requests for comment.
http://www.washingtonpost.com/blogs/pos ... 7c5c814d82
If you bend over backwards long enough,
eventually you'll fall down.
eventually you'll fall down.
Re: Moodys says Obama is wrong about raising debt ceiling
Yeah, the same rating agency that considers US debt prime. That is certainly consistent with:awesome guy wrote:Moodys are GOP hacks!</H2>
If there was a short term problem (or if we were broke, or couldn't pay our bills) we wouldn't be prime!awesome guy wrote:The problem is shorter term than that and will ruin the machine if kept running, preventing future use.
People who know, know.
Re: Moodys says Obama is wrong about raising debt ceiling
Well, I think it's an interesting question that I would like to have answered by someone who isn't coming at it from a political bent.TheH2 wrote:Lew (the Treasury Secretary), JP Morgan and others agree. The question is the exact date. JP Morgan estimates it as the 24th, others say November 1.
I think there's some guessing/lying on both sides.
Suppose we hit the debt ceiling and exhaust the "extraordinary measures" we have been taking for five months or whatever. I think the Democrats are 100% wrong to call that an automatic "default" for the reasons already stated innumerable times - enough money comes in from taxes that we can continue to make bond payments.
HOWEVER ... I don't think the other side is exactly right either for this reason:
The national debt is NOT your credit card bill where you choose each month whether you want to make the minimum payment (just interest) or whether you want to make a larger payment. Rather, it's financed through a series of bonds that expire at various times. When a bond comes due, we owe the value of that bond at that point. So say that (and I'm making up a number), $50 billion in bonds come due today. If we were to pay those bonds off with cash on hand, then our debt will drop by $50 billion. But if we don't have cash on hand, then we have to float new bonds to pay them off. Presumably, those new bonds are going to be at a higher yield than the old one and so it is possible, especially given all of these short term bonds we have out there, that we are going to have one particular day where more more bonds come due than we have cash to pay them off or room under the debt ceiling to float new ones. Remember: it doesn't matter what our average income vs bond payments are per month. Rather, it matters whether we have the cash on hand today plus borrowing authority today to make bond payments. I might make $50K/week (because you know I'm a rich Republican), which averages out to $200K/month, but if I need to pay $100K today, it doesn't help me that money to cover that payment will be coming in later in the month.
Posted from my Commodore 64 using Tapatalk
- RiverguyVT
- Posts: 30299
- Joined: Wed Aug 21, 2013 9:30 pm
Re: Moodys says Obama is wrong about raising debt ceiling
I tend to listen when H2 posts financial stuff.
He's my (liberal) EF Hutton. ;oD
He's my (liberal) EF Hutton. ;oD
So I put (the dead dog) on her doorstep!
Salute the Marines
Soon we'll have planes that fly 22000 mph
"#PedoPete" = Hunter's name for his dad.
Salute the Marines
Soon we'll have planes that fly 22000 mph
"#PedoPete" = Hunter's name for his dad.
- awesome guy
- Posts: 54187
- Joined: Wed Aug 21, 2013 7:10 pm
- Party: After 10
- Location: Plastic Flotilla:Location Classified
Re: Moodys says Obama is wrong about raising debt ceiling
Reading is fundamental, try again.TheH2 wrote:Yeah, the same rating agency that considers US debt prime. That is certainly consistent with:awesome guy wrote:Moodys are GOP hacks!</H2>
If there was a short term problem (or if we were broke, or couldn't pay our bills) we wouldn't be prime!awesome guy wrote:The problem is shorter term than that and will ruin the machine if kept running, preventing future use.
Unvaccinated,. mask free, and still alive.
Re: Moodys says Obama is wrong about raising debt ceiling
Please explain yourself. I've provided several metrics, all of which show we don't have a short term debt problem. As far as I can tell you seem to now agree with that. Contrary to your point of view in the last two weeks. It's nice to see that, at least this time, when you are ignoring the facts when you post, you are considering them, and indeed learning in the future.awesome guy wrote:
Reading is fundamental, try again.
People who know, know.
Re: Moodys says Obama is wrong about raising debt ceiling
JP Morgan thinks this will happen some time around the 24th. Others, including Goldman say it is around November 1st. Lew doesn't seem to give an indication (and maybe he doesn't know) other than it isn't the 17th. I think they (banks) are fairly unbiased while having A LOT (can't be emphasized enough) at stake if entities stop being able to post collateral.BigDave wrote:Well, I think it's an interesting question that I would like to have answered by someone who isn't coming at it from a political bent.TheH2 wrote:Lew (the Treasury Secretary), JP Morgan and others agree. The question is the exact date. JP Morgan estimates it as the 24th, others say November 1.
I think there's some guessing/lying on both sides.
Suppose we hit the debt ceiling and exhaust the "extraordinary measures" we have been taking for five months or whatever. I think the Democrats are 100% wrong to call that an automatic "default" for the reasons already stated innumerable times - enough money comes in from taxes that we can continue to make bond payments.
HOWEVER ... I don't think the other side is exactly right either for this reason:
The national debt is NOT your credit card bill where you choose each month whether you want to make the minimum payment (just interest) or whether you want to make a larger payment. Rather, it's financed through a series of bonds that expire at various times. When a bond comes due, we owe the value of that bond at that point. So say that (and I'm making up a number), $50 billion in bonds come due today. If we were to pay those bonds off with cash on hand, then our debt will drop by $50 billion. But if we don't have cash on hand, then we have to float new bonds to pay them off. Presumably, those new bonds are going to be at a higher yield than the old one and so it is possible, especially given all of these short term bonds we have out there, that we are going to have one particular day where more more bonds come due than we have cash to pay them off or room under the debt ceiling to float new ones. Remember: it doesn't matter what our average income vs bond payments are per month. Rather, it matters whether we have the cash on hand today plus borrowing authority today to make bond payments. I might make $50K/week (because you know I'm a rich Republican), which averages out to $200K/month, but if I need to pay $100K today, it doesn't help me that money to cover that payment will be coming in later in the month.
People who know, know.
- awesome guy
- Posts: 54187
- Joined: Wed Aug 21, 2013 7:10 pm
- Party: After 10
- Location: Plastic Flotilla:Location Classified
Re: Moodys says Obama is wrong about raising debt ceiling
Explain yourself. Moodys says your rant de jour is bull, so you try and change the subject.TheH2 wrote:Please explain yourself. I've provided several metrics, all of which show we don't have a short term debt problem. As far as I can tell you seem to now agree with that. Contrary to your point of view in the last two weeks. It's nice to see that, at least this time, when you are ignoring the facts when you post, you are considering them, and indeed learning in the future.awesome guy wrote:
Reading is fundamental, try again.
I maintain debt is an issue in the short term because we're at the end of being able to constrain it and pay it off with significant long term pain. It's the crux, the end of the current life on the gravy train.
Unvaccinated,. mask free, and still alive.
Re: Moodys says Obama is wrong about raising debt ceiling
If debt was an issue in the short term our credit rating would not be prime. The debt ratings generally map to an expected default frequency (EDF). If that was an issue I assure you we wouldn't have a prime rating. The rating in and of itself is 100% inconsistent with your notion that we have a short term debt problem.awesome guy wrote:Explain yourself. Moodys says your rant de jour is bull, so you try and change the subject.TheH2 wrote:Please explain yourself. I've provided several metrics, all of which show we don't have a short term debt problem. As far as I can tell you seem to now agree with that. Contrary to your point of view in the last two weeks. It's nice to see that, at least this time, when you are ignoring the facts when you post, you are considering them, and indeed learning in the future.awesome guy wrote:
Reading is fundamental, try again.
I maintain debt is an issue in the short term because we're at the end of being able to constrain it and pay it off with significant long term pain. It's the crux, the end of the current life on the gravy train.
As is the myriad of other examples I gave in the 'I want to go over the debt limit Oakton thread'.
The S&P credit rating being one of the criteria I gave for why we don't have short term funding issues. No government (and I'm pretty sure company) has ever defaulted within 10 years (may even be 20) of receiving a AAA rating.
People who know, know.