Relax chicken little. The sky is not falling.
No, but our credit rating is because of the insane spending we are doing.
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Will US Lose Its Triple-A Ranking? Investors Yawn
Blase about triple-A: Will US lose its top credit rating? Bigger worry: Investor indifference
By BERNARD CONDON AP Business Writer
NEW YORK March 19, 2010 (AP) The Associated Press
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(AP)It's the financial equivalent of a high medal count at the Olympics or a seat on the U.N. Security Council — a triple-A credit rating, the seal of approval that lets investors know a country's bonds are safe.
The U.S. is one of a small number of nations with the coveted rating — for now. Moody's Investors Service warned this week that the government's massive debt burden could cost the country its triple-A.
Yet the reaction from investors and the public has mostly been a shrug.
The stock market was briefly rattled, then resumed its gradual climb. And ordinary folks didn't seem to notice a report raising the possibility that their children and grandchildren face a lower standard of living thanks to mounting government debt.
A triple-A rating says a country is very unlikely to default on its debt. Like a homeowner with a good credit rating, countries with this exalted status get better interest rates when borrowing with notes and bonds.
A downgrade often means they have to offer higher rates to get investors to bite, a move that ripples through the credit markets and in turn hikes rates on mortgages, credit cards and car and business loans.
"It's a little scary," says Benn Steil, a senior fellow at the Council on Foreign Relations. The U.S. debt situation "is serious, and it needs to be addressed now."
Countries and territories in the world deemed safe enough to merit triple-A by another credit agency, Standard & Poor's, now number a mere 18 out of 123 rated. France, Germany and Britain earn top marks, as do some curiosities like the Grand Duchy of Luxembourg and the Bailiwick of Guernsey. Moody's technically calls the rating Aaa, while S&P calls it AAA.
Japan dropped out of this elite group in 2001. In March, Ireland was downgraded. Spain lost bragging rights in January.
The next step down at Moody's is Aa1. At S&P, it's called AA+. Either one would be far ahead of most other countries but still something of an embarrassment for the United States.
