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October 24, 2011
Is Another Debt Downgrade On The Way?
Topics: Political News and commentariesAs Obamanomics continues to rush us toward national insolvency, Merrill Lynch is telling investors to expect another downgrade of U.S. debt before the end of the year:
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."Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes."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.
Given that the likelihood of the 'super committee' crashing is significantly strong and that Barack Obama is determined to spend more - not less, this means that we can expect another downgrade with some degree of certainty. And in what amounts to a bit of a benchmark in that direction, Obamanomics will have the US debt officially surpassing GDP on Halloween 2011.
Meanwhile, Bloomberg reports that Bank of America has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion being dumped on U.S. taxpayers.
Posted by Richard at October 24, 2011 9:05 AM
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