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S&P Promises Downgrade Upon Default

John on June 30, 2011 at 2:37 am

How about a little sobering news. This actually appeared yesterday afternoon a few hours after Obama’s speech:

The United States would immediately have its top-notch credit rating slashed to “selective default” if it misses a debt payment on August 4, Standard & Poor’s managing director John Chambers told Reuters.

Chambers, who is also the chairman of S&P’s sovereign ratings committee, said on Tuesday that U.S. Treasury bills maturing on August 4 would be rated ‘D’ if the government fails to honor them. Unaffected Treasuries would be downgraded as well, but not as sharply, he said.

“If the U.S. government misses a payment, it goes to D,” Chambers said. “That would happen right after August 4, when the bills mature, because they don’t have a grace period.”

Of course the threat of a downgrade is just as real for the Democrats as for Republicans. I hope the GOP gets all they can out of any agreement to raise the limit, preferably some serious cuts this time.

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Category: Energy & Economy |

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