American credit rating to be downgraded again
This news comes from a report out of one of the biggest names in the banking industry, Bank of America Merrill Lynch, issued on Friday. "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 writes in a report from last week."Hence, we expect at least one credit downgrade in late November or early December when the super committee crashes," adds Harris.The 12-member bipartisan super committee has until November 23 to find a solution to America’s ongoing deficit dilemma, which played a large role in triggering S&P to issue their downgrade back in August. At the time, it was the first time America’s sovereign debt had been devalued by any of the top-three. With the super committee’s deadline less than a month away now, Harris’ report considers another downgrade likely if the congressional leaders involved in finding a solution cannot come up with a plan.Should a plan not materialize in time, $1.2 trillion in automatic spending cuts will be instated starting in 2013, which will largely pull from discretionary spending. That isn’t to say, however, that it won’t impact the faltering American economy any further. If a plan is not put together and a downgrade is in fact issued, economic woes for Americans are almost certain to worsen.Harris’ assumption is indeed just that, but Moody’s did in fact reveal that the US credit rating is currently under review for a possible downgrade. Speaking to Reuters last week, Moody’s lead analyst Steven Hess said, “It’s not that we’re waiting just for this committee to decide on the rating,” and that a failure from the super committee “would be negative information but it is not decisive in our view about the rating.”In the days leading up to America hitting its debt ceiling earlier this year, investor and author Jim Rogers told RT that anything Congress did at the time would only postpone further catastrophe for the country.“They’re going to announce something either the day before, the day of or the day after and they’re going to say everything is okay.” Rogers said in August, adding, however, that “America is going to be in worse shape than it is now.”“They are going to continue to spend and drive us deeper into debt,” said Rogers. “I don’t see any chance of turning it around.”“Even if they default on August 2, 3, 4 — they’ll be back playing the same old games,” he said.Standard & Poor’s eventually issued their downgrade on August 5, 2011 — less than a week after China’s Dagong Global Credit Rating did the same.