Will the U.S. Default On Its Debt … Even If It Raises the Debt Ceiling?

Thursday, July 14, 2011
By Paul Martin

Washington’s Blog
July 14, 2011

Many in Washington are warning that – unless a compromise to raise the debt ceiling is reached – the U.S will default on its debt.
Moody’s has put the U.S. on a credit review for a possible downgrade due to the failure to reach a debt ceiling agreement.
Standard and Poor’s said earlier this month that it would likely consider the Greek bailout plan to be a default. And see this.
But the American situation is different – both because we are the world’s largest economy and because raising the debt ceiling is different from the Greek plan.
Right?
Hopefully. But as Zero Hedge notes:

China Daily has just reported that according to the notorious … Dagong rating agency, ”The US’ sovereign credit rating is likely to be downgraded regardless of whether the US Congress reaches an agreement on raising its statutory debt limit. “If the debt limit is raised and the public debt continues to grow, it will further damage the US’ debt-paying ability, which is a key factor in Dagong’s evaluation, and we will consider lowering its ratings accordingly,” said Guan Jianzhong, chairman and CEO of Dagong. “If the raised limit fails to pass and the US faces default, the rating will be immediately and substantially downgraded,” he said. According to Guan, the downgrading is really just “a matter of time and extent”.

The Rest…HERE

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