Moody's Fires Warning on U.S. Credit Rating

ABC News reports:

In a release this afternoon, the Moody’s ratings agency said it would put the U.S. credit rating under review if Congress and the Obama administration don’t make progress on increasing the debt limit. Treasury is currently posting a U.S. total debt at $14,344,668,281,211.01 – well above the $14.294 trillion limit thanks to some borrow Peter/pay Paul moves with Federal employee retirement accounts.

“If the debt limit is raised and default avoided, the Aaa rating will be maintained,” says the press release. “However, the rating outlook will depend on the outcome of negotiations on deficit reduction. A credible agreement on substantial deficit reduction would support a continued stable outlook; lack of such an agreement could prompt Moody's to change its outlook to negative on the Aaa rating.”

Moody’s says the increased political “polarization” over increasing the government’s statutory debt limit has increased the chances that Uncle Sam will miss some interest payments – a default in the parlance of Wall Street.