Should the U.S. Investment Grade be Lowered?

25 07 2011

What is an Investment grade? It is a rating that assesses the credit worthiness of a corporation’s or government’s debt. With the U.S debt ceiling on the brink of being reached, and no deal in place, there is speculation that the International Monetary Fund may consider downgrading the U.S. government’s credit rating. Such a move could be “extremely damaging” not just for the U.S. but for the global economy as a whole.

Interestingly, the United States has never had its top-tier rating lowered. I think that will make it a little more difficult to just simply choose to downgrade. A lot of analysis will need to take place. Of course, if the nation’s borrowing limit is not raised by next week, then that may leave the IMF with little to no choice, as a consequence of not raising the limit includes the U.S. defaulting on many of its bills.

In order to prevent a revision in the U.S. Investment grade, policy makers need come up with a careful, realistic plan. Some suggest a gradual consolidation of U.S. debt to help reduce risk, as well as getting control over the housing market and stimulating further job growth. Easier said than done, I think.




One response

25 07 2011
Should the U.S. Investment Grade be Lowered? | Debt Consolidation Explained

[…] Read this article: Should the U.S. Investment Grade be Lowered? […]

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