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\f0\b\fs24 \cf2 \cb3 BY STEVEN SPARKMAN \b0 \
\ Moody\'92s rating agency says it may cut the
U.S. government\'92s credit rating. A new report says the U.S.\'92s triple-A could depend
on Congressional debt negotiations in 2013.\ \
\pard\pardeftab720\ql\qnatural {\field{\*\fldinst{HYPERLINK "http://www.moodys.com/research/Moodys-issues-update-on-the-outlook-for-the-US-governments--PR_254944"}}{\fldrslt
\cf4 \ul \ulc4 The report says}} the triple-A will stay if Congress can enact legislation
to bring down the country\'92s debt-to-GDP ratio \'97 meaning national debt as a percentage
of total output. If not, expect a rating cut before 2014, likely to a AA1.\
\ The U.S.\'92 credit rating has already been
cut once before. S&P cut the rating to AA+ last August when Congress took till the eleventh
hour to avoid a government shutdown.\ \
\pard\pardeftab720\ql\qnatural {\field{\*\fldinst{HYPERLINK "http://www.forbes.com/sites/steveschaefer/2012/09/11/moodys-says-u-s-has-until-end-of-2013-to-save-aaa-rating/"}}{\fldrslt
\cf4 \ul \ulc4 A writer for Forbes}} says since then agencies like Moody\'92s have used
the threat of a ratings cut to push for \b \'93fiscal discipline and action from Congress.\'94
\b0 \ \
Business media reacted differently to the news. For instance, {\field{\*\fldinst{HYPERLINK
"http://www.cnbc.com/id/48985074"}}{\fldrslt \cf4 \ul \ulc4 a CNBC panel}} points out last
year\'92s rating cut didn\'92t lead to the gloom and doom analysts predicted.\
\ \pard\pardeftab720\ql\qnatural
\b \cf2 \'93The yield on the 10-year promptly plunged.\'94\
\'93Right. \'85 And equities, too.\'94\ \'93I mean, literally, this was one of those
moments where the vast majority of people had it wrong.\'94
\b0 \ \
\pard\pardeftab720\ql\qnatural {\field{\*\fldinst{HYPERLINK "http://www.bloomberg.com/video/u-s-fiscal-cliff-to-affect-rating-hayes-says-fC2wWhQqQjm~HlYaE3VWpg.html"}}{\fldrslt
\cf4 \ul \ulc4 But an analyst for Bloomberg}} says the threat of higher interest rates on
government debt as a result of the cuts is too serious to ignore.\
\ \pard\pardeftab720\ql\qnatural
\b \cf2 \'93How many times do you see bonds rally the way they did when they got cut by
S&P? Very unlikely to happen if Moody\'92s takes action again. So they really need to
pay attention what that means for interest rates.\'94
\b0 \ \
A few sites were largely critical of Moody\'92s. {\field{\*\fldinst{HYPERLINK "http://blogs.barrons.com/incomeinvesting/2012/09/11/et-tu-moodys-rating-agency-warns-of-u-s-credit-downgrade/"}}{\fldrslt
\cf4 \ul \ulc4 A writer for Barron\'92s asks}}, if the negotiations aren\'92t until next year,
why give the warning now...\ \
\b \'93...the morning of the 11th anniversary of the Sept. 11th attacks, in the midst of
a heated presidential campaign ... and during a week in which the Fed is widely expected
to announce further quantitative easing measures...\'94 \b0 \
\ \pard\pardeftab720\ql\qnatural
{\field{\*\fldinst{HYPERLINK "http://www.businessinsider.com/moodys-threatens-to-downgrade-the-us-2012-9#ixzz26Ax6i98s"}}{\fldrslt \cf4 \ul \ulc4 A Business Insider writer}}
was even more harsh, criticizing not just the timing, but also the idea of a \'93debt
deal.\'94 The site notes efforts to cut spending always seem to lead to more debt.\
\ \pard\pardeftab720\ql\qnatural
\b \cf2 \'93So not only does this warning from Moody's come at a terrible time, it's
asking Congress to do something impossible, which is reduce debt-to-GDP by focusing on
debt-to-GDP rather than focusing on growth. Our advice to everyone is to ignore Moody's.\'94
\b0 \ \
\pard\pardeftab720\ql\qnatural {\field{\*\fldinst{HYPERLINK "https://twitter.com/LisaDCNN/statuses/245514898124201984"}}{\fldrslt
\cf4 \ul \ulc4 But a CNN radio reporter noted on Twitter}}, the report hits just as Congress
gets back to work, and is likely meant as a warning.\
\ Current government figures put the debt-to-GDP
ratio at 101.6 percent \'97\'a0just over $16 trillion.
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