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U.S. debt

U.S. debt rating downgraded to C status by Weiss Ratings

Wednesday, May 11, 2011 by: J. D. Heyes
Tags: U.S. debt, rating, health news

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(NaturalNews) Despite being awash in red ink - to the tune of more than $14 trillion - the United States has managed to retain its AAA credit rating, which is the highest rating available. But at least one economist thinks that is more about smoke and mirrors rather than a rating based on solid financial numbers.

Martin Weiss, president of Weiss Ratings, said in an interview with financial newswire service CNBC.com last week that the nation's sovereign debt rating should be more like a "C."

"A 'C' is equivalent to approximately a triple-B on the S&P, Moody's and Fitch scales. It's two notches above junk and one notch above the equivalent of a single A," Weiss said.

His assessment comes on the heels of an earlier credit assessment by Standard & Poor's, which downgraded its U.S. debt outlook from "stable" to "negative" in April.

"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," the agency said in a statement.

On Monday, U.S. Treasury debt prices dipped somewhat as investors shied away from bonds in preference of commodities, ahead of a planned sale of $72 billion worth of U.S. government debt .

For his part, Weiss said that although his rating seemed weak, U.S. debt had yet to enter a place where it's time to panic, adding there was still good demand for U.S. Treasuries, the principle method Washington uses to raise capital to finance its operations. But that assumes nations will continue buying our debt.

Continuous government borrowing coupled with little appetite to seriously cut spending means the government is once again getting close to the current debt ceiling of $14.3 trillion. The Obama administration and many members of Congress are pushing to raise the ceiling once more, surpassing a level that is already nearly 100 percent of annual gross domestic product.

And it is that kind of economic cowardice and volatility that drives Weiss' assessment, which is one of the most honest in the industry because it uses real numbers and doesn't take into account any so-called qualitative factors such as political stability.

Americans generally have not wanted to think much about our nation's growing, staggering debt. But just like ordinary Americans, governments, too, can only max out their credit cards for so long.

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