Wintery Knight

…integrating Christian faith and knowledge in the public square

Merril Lynch analyst: U.S. credit rating likely to be downgraded again

From Reuters. (H/T Reason to Stand)

Excerpt:

The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

A second downgrade — either from Moody’s or Fitch — would follow Standard & Poor’s downgrade in August on concerns about the government’s budget deficit and rising debt burden. A second loss of the country’s top credit rating would be an additional blow to the sluggish U.S. economy, Merrill said.

“The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan” to cut the deficit, Merrill’s North American economist, Ethan Harris, wrote in the report.

“Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes,” he added.

The bipartisan congressional committee formed to address the deficit — known as the “super committee” — needs to break an impasse between Republicans and Democrats in order to reach a deal to reduce the U.S. deficit by at least $1.2 trillion by November 23.

If a majority of the 12-member committee fails to agree on a plan, $1.2 trillion in automatic spending cuts will be triggered, beginning in 2013.

What I am hearing from my sources is that the debt super-committee is not doing well at all on deciding on the cuts that everyone agreed were needed to raise the debt ceiling. I really do not feel good about the defense cuts, given what I am hearing about new Russian and Chinese 4th generation fighters. This is going to put a lot of pressure on our military if things go badly in Afghanistan and Iraq.

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One Response

  1. Mike Singer says:

    I suspect this might be the final deathblow to the Sovereignty of the United States and be forced to succumb to the UN.

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