S&P warns U.S. of risks in debt ceiling battle

Standard & Poors is warning that if the U.S. defaults on a $30 billion debt payment on August 4, the nation's credit rating will be downgraded severely from its long-held AAA to a D ranking.

S&P managing director John Chambers tells Reuters news agency that, while it's an extremely unlikely outcome, such an unprecedented default on U.S. Treasuries could lead to the complete collapse of global financial markets.

"If the U.S. government misses a payment, it goes to D," Chambers told Reuters. "That would happen right after August 4, when the bills mature, because they don't have a grace period."

Chambers, along with the chiefs of the other two primary international credit ratings agencies, Moody's Investors Service and Fitch Ratings, have expressed increasing concern that the failure of Democrats and Republicans in Congress to reach a compromise and raise the U.S. debt limit may have an adverse affect on global confidence in American securities.

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As Reuters notes, however, only the S&P has downgraded the outlook for the U.S. credit rating, with the agency saying there's a one-in-three chance of a downgrade in the coming two years.

Still, Chambers told the news agency he saw the likelihood of a U.S. technical default on a debt payment as "extremely low" - predicting Congress will find a compromise and raise the debt limit before the country is rendered unable to make payments, which Treasury Secretary Timothy Geithner has said would happen on August 2.

[tempest112]

This is not a party issue it is a national issue. Be part of the solution and find out the real enemy not the hyped up bull spread by party extremist. The foundation of our present situation is that debt is consuming most of the disposable income we produce as a nation. This is true for us as individuals and the nation. In 2007 $412 Billion USD of our tax revenue was consumed due to America's Public debt. Why did the 700 Billion USD Bailout fail? Why did the banks need to borrow trillions of dollars in discount loans.
1. The Bailout provided no disposable income to support the economy.
2. The Bailout provided no realistic means of eliminating the banks toxic debt...http://writeinvote2012.wordpress.com

[Alex_Votocracy]

What are your thoughts on Greece imposing a new tax that takes into account your electric bill? Will it save money for us or the government? Come discuss on an open political platform and discussion poll: http://www.votocracy.com/poll

[inkomwealth]

will implode soon

[valnew]

We at The Activist Middle have felt they are all neglecting the true middle class. We need to make sure that people know what is in thier best interest and not be swayed by some subgroup that is making money, or just trying to play on thier fears.Visit ... theactivistmiddle.com.

[tempest112]

Tell me about it. I have been blogging since 2005 discussing debt impact on the U.S. and the world. When that failed I returned to the U.S. to speak in person. I was called a domesayer, conartist, chicken little and more. The numbers in early 2008 indicated that the Debt Bubble was about to pop. I contacted every Governor From Washinton to Florida. I contacted both Parties and was told there was no economic problem. All the way up to August the Parties were saying all is well. Saying I told you so does not bring satisfaction. The political leadership has still taken no actions to deal with the problem and the entire world economies are at stake. Visit http://writeinvote2012.wordpress.com bring your friends safing our economy depends on what we do.

[liberalmike]

The S&P people are Teabaggers what do you expect?

[liberalmike]

Its time to dig up the dirt on them!

[Ordflyer]

I'm starting to wonder if Standard and Poor is a terrorist organization!!?? No payments were missed - someone is making a financial killing off this act of financial hysteria (terrorism) induced by the S&P academics...

[misands]

I think that is great news! Better yet, I would prefer all of the credit agencies to downgrade America to an F rating. It is wonderful seeing the piper having to be paid after years of watching the greedy and ignorant Americans swarming like flies on stink to vote for everyone who promises them the moon while promising to cut taxes.

[worldcitizen1]

The US congress is dysfunctional! Term limits might help.

[polarik]

The deb ceiling has n othing to do with making payment on the interest. They are confusing interest with the principle. How stupid is that?

30B is 10% of what the Treasury pays out.

[expatriate2]

Reduce the rating to D and force on the government the things it has not been willing to do, whether the administration was GOP or Democrat. The U.S. Government recognizes that this planet is occupied by 194 nations and has a military presence in 150 of them. If this massive expenditure is intended to bring security to America, then why do we have a secondary expenditure of billions with the myth-making Homeland Security folks? Force the cuts in any form necessary and maybe someone will turn an eye to the domestic problems that really matter.

[sandiegopete]

One thing the mortgage fiasco taught us is that the rating companies will go along with whatever the individual (includes corporatons according to the SCOTUS) who pays them the most money tells them to do. Considering the involvement Goldman Sachs has in the Greek situation I wonder whether it was Goldman who paid off S&P.

[liberalmike]

exactly.S&P are scumbags!