Fitch puts U.S. on notice for possible credit downgrade

[Bill USA]

http://www.washingtonpost.com/blogs/post-politics-live/liveblog/live-updates-the-shutdown-8/?id=2ffd5d41-0848-44e1-9451-479e5f70f49b

On Tuesday, Fitch Ratings announced that it was accelerating its timetable for a potential U.S. credit rating downgrade, citing the brinksmanship in Washington. Fitch would become the second credit rating firm to downgrade U.S. government debt, which could have ripple effects across a range of markets.

“Political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default,” Fitch said late Tuesday. “The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as Social Security payments to citizens — all of which would damage the perception of U.S. sovereign creditworthiness and the economy.”

Fitch’s decision doesn’t actually downgrade the United States’ credit rating, but serves as a signal that it might should the political situation continue to threaten the U.S.’s ability to pay its debts. The Treasury Department says it will run out of borrowing authority on Thursday — the deadline for Congress to come to an agreement to raise the nation’s debt ceiling.

“Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows,” Fitch said. “The Treasury may be unable to prioritise debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens — all of which would damage the perception of U.S. sovereign creditworthiness and the economy.”
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[blkmusclmachine]

1. Republican Economic Terrorism. (my k&r statement for the day)