US Credit Rating Lowered in Advance of Deadline

Egan-Jones is not one of the largest of the ratings companies, but ‘large’ sometimes means ‘slow to move.’  Smaller, nimble ratings companies keep their ears to the ground and, by hearing a stampede in the distance, are able to provide proactive information to their subscribers   (http://www.egan-jones.com/)

 

Egan-Jones Cuts U.S. Rating to AA+ on Spending-Cut Concern

By John Detrixhe – Jul 18, 2011 2:12 PM PT

Egan-Jones Ratings Co. cut its rating on the U.S. by one step to AA+ from AAA, citing the high level of debt outstanding relative to other countries and concern that politicians may fail to reduce spending.

“The major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending,” the firm said July 16 in a report. Egan-Jones placed the U.S. on negative watch on March 1.

Republicans are using talks to increase the $14.3 trillion debt-ceiling to press for cuts in spending. Treasury Secretary Timothy F. Geithner has said the government, which reached its borrowing limit on May 16, will run out of options to prevent a default on Aug. 2. The most likely outcome of the negotiations is that the federal government will fail to reduce its debt to gross domestic product “in any sort of meaningful fashion,” said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania.

“We’ll muddle along, we won’t decrease the debt to GDP,” Egan said today on Bloomberg Television’s “Street Smart” with Carol Massar. “Then we’ll be faced with the crushing blow of the baby boomers retiring.”

Moody’s Investors Service and Standard & Poor’s have put the U.S. debt rating on review for downgrade.

To contact the reporter on this story:

John Detrixhe in New York at jdetrixhe1@bloomberg.net

To contact the editor responsible for this story:

Dave Liedtka at dliedtka@bloomberg.net

US credit downgraded to AA+ by Egan-Jones

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About carlos

I'm a curious person, of reasonable intellect, "on the beach" (retired) and enjoying my interest in anthropology, language, civil rights, and a few other areas. I've been a hippie/student/aerospace tech writer in the '60s, a witness to the Portuguese revolution in the ‘70s, a defense test engineer and witness to the Guatemalan genocide in the '80s, and a network engineer for an ISP in the '90s. Now I’m a student and commentator until my time is up. I've spent time under the spell of the Mesoamerican pyramids and the sweet sound of the Portuguese language. I've lived in Europe, traveled in Brazil, Central America, Iceland, New Zealand, and other places. My preferred mode of travel is with a backpack and I eat (almost) anything local. Somehow, many of the countries I have been to have had civil unrest (for which I was not responsible). I'm open to correspond with anyone who might share my liberal, humanist interests. I live in San Buenaventura, California.
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