Will the US credit rating be downgraded again next month?

[The world will shine with light in our nightmare]

Right now, I'm a lean yes even if a deal is reached before the deadline, which I highly doubt will happen.

[True Federalist (진정한 연방 주의자)]

If it does, it won't be because of the cliff but because of us hitting the debt ceiling once again.  While going off the cliff will cause a mild economic downturn, even when you figure in the cost of that, it will actually improve the fiscal health of the US.

[🐒Gods of Prosperity🔱🐲💸]

I'm worried that if Congress decides to delay the sequestration without any cuts after all this, it will be a strong signal that there's no willingness to do deficit reduction.

[TheDeadFlagBlues]

I'm worried that if Congress decides to delay the sequestration without any cuts after all this, it will be a strong signal that there's no willingness to do deficit reduction.

A lack of willingness to reduce the deficit at the present wouldn't reduce our credit rating, the political discord that created a lack of deficit reduction would downgrade our credit rating.

[Beet]

Both Moody's and Fitch have the U.S. rating at negative and have said that extended talks being dragged out with a long term deficit reduction plan would lead to cuts. That would raise the borrowing costs of the U.S. government ceteris paribus. Many institutions would have to dump U.S. debt because there are statutory requirements stating that they can only hold securities that have been rated as AAA by two out of the Big Three ratings agencies. And there is a cascade effect because all securities whose AAA rating is based on the U.S. government's guarantee cannot be AAA. Hence there would be a major deleterious impact across the board.

This is one of the main reasons why it's important to avoid the fiscal cliff, and reach agreement on the debt ceiling and long term deficit reduction.

[True Federalist (진정한 연방 주의자)]

Both Moody's and Fitch have the U.S. rating at negative and have said that extended talks being dragged out with a long term deficit reduction plan would lead to cuts. That would raise the borrowing costs of the U.S. government ceteris paribus. Many institutions would have to dump U.S. debt because there are statutory requirements stating that they can only hold securities that have been rated as AAA by two out of the Big Three ratings agencies. And there is a cascade effect because all securities whose AAA rating is based on the U.S. government's guarantee cannot be AAA. Hence there would be a major deleterious impact across the board.

This is one of the main reasons why it's important to avoid the fiscal cliff, and reach agreement on the debt ceiling and long term deficit reduction.

Going along with the credit rating scam is not particularly important.

[memphis]

Has the US ever been able to borrow so cheaply? The credit ratings agency would do so at their peril. And yet it seems this is exactly what they GOP wants. The only option they have left is to burn down America and blame Obama.  Would you bet on it?

[Beet]

Both Moody's and Fitch have the U.S. rating at negative and have said that extended talks being dragged out with a long term deficit reduction plan would lead to cuts. That would raise the borrowing costs of the U.S. government ceteris paribus. Many institutions would have to dump U.S. debt because there are statutory requirements stating that they can only hold securities that have been rated as AAA by two out of the Big Three ratings agencies. And there is a cascade effect because all securities whose AAA rating is based on the U.S. government's guarantee cannot be AAA. Hence there would be a major deleterious impact across the board.

This is one of the main reasons why it's important to avoid the fiscal cliff, and reach agreement on the debt ceiling and long term deficit reduction.

Going along with the credit rating scam is not particularly important.

The credit rating system is a joke, I'm just saying the practical consequences of this could be severe, negative, and not easily recoverable from. As far the debt ceiling goes, I'm more worried about this than anything, because even if Treasury shifts funds around to make sure all bonds that come due are properly redeemed, there's nothing anyone in government can do if a private rating agency decides to downgrade the U.S.

http://blogs.marketwatch.com/thetell/2013/01/03/why-the-next-u-s-downgrade-will-really-matter/

[Maxwell]

I'm cautiously optimistic that we don't and we do raise the debt ceiling (at the request that the Sequester is allowed to go through), but I'm doubtful.

[TeePee4Prez]

Maybe.  Will it matter? NO.  Why?  The ratings agencies spew crap anyway.  Hey, they let mortgage backed securities off the hook with AAA.  Besides, the markets already have that factored in.