Tuesday, February 01, 2011


Ability to pay? How does this reasoning even apply in an era of computerized spreadsheet debit/credit entries? Countries simply change entries in a spreadsheet...they do not ship gold to foreign locales, nor must they "get" their own sovereign currency "from" somewhere in order to debit or credit these security accounts. Has Japan exibited a decreased "ability" to pay in light of its 190 debt/GDP ratio?

Another possibility is that Moody's is aware of the above, but is publishing this for other, more self-interested reasons.

Moody’s Says Time to U.S. Outlook Change Shortens (Update1)

By Christine Richard

Jan. 27 (Bloomberg) -- Moody’s Investors Service said its time frame for possibly placing a negative outlook on the Aaa rating of U.S. Treasury bonds is shortening as the country’s deficit widens.

The outcome of the November elections, the extension of tax cuts and the chance that Congress will not address deficit reduction have increased Moody ’s uncertainty over the willingness and ability of the U.S. to reduce its debt, the credit-ratings company said today in a report.

“Although no rating action is contemplated at this time, the time frame for possible future actions appears to be shortening, and the probability of assigning a negative outlook in the coming two years is rising,” wrote Steven Hess , a senior credit officer in New York and the author of the report. The rating remains stable, according to the report.

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