Game changer: S&P warns of pre-default downgrade
GAME CHANGER: S&P WARNS OF PRE-DEFAULT DOWNGRADE - S&P’s John Chambers, in a private meeting with top Senate Democrats and officials from the Chamber of Commerce and Financial Services Forum, said the U.S. may face a credit downgrade EVEN IF Treasury manages to keep making interest payments by taking money from other programs, officials told M.M. This detail, which also makes the WSJ today, should kill the persistent but erroneous argument that the Aug. 2nd date is a meaningless threat and that the U.S. could easily avoid significant negative ramifications if it fails to raise the debt ceiling by then.
While the U.S. could temporarily avoid technical default, the comments from S&P’s Chambers, managing director of sovereign debt for the ratings agency, mean the U.S. could still lose its triple-A credit rating as of Aug. 2nd, which could lead to higher interest rates throughout the economy, reduced growth and fewer jobs. There is nothing fake about the ticking clock.