While Moody’s Investors Services placed the U.S. triple-A credit rating on review for a downgrade Wednesday, another rating agency may soon go several steps further.
Weiss Ratings is “very close” to downgrading U.S. government debt another notch, to “C-minus” on its own scale, just a step above junk, Martin Weiss, president of the ratings group, tells CNBC.
Moody’s and Standard & Poor’s should have ditched the triple-A rating long ago, Weiss says.
"(The United States) has a huge debt load compared to most other countries," he says. "It has a very unstable economy over the last 10 years compared to most other countries."
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The federal government’s debt is close to 100 percent of GDP.
“The only thing that's really holding up the U.S. debt rating is a widespread international acceptance for U.S. Treasury securities and nice strong liquid market. But even that might be coming into question,” Weiss says.
This uncertainty stems from the difficulty Congress and the White House are having in reaching an agreement to increase in the debt limit. Still, Weiss sees a good chance that a last-minute accord will be consummated.
Federal Reserve Chairman Ben Bernanke is very concerned about the debt limit issue too.
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Failure to raise the ceiling by the Aug. 2 deadline would represent a “huge financial calamity,” he warned Congress. Huge cuts in Social Security, Medicare, and/or military pay would ensue, Bernanke says.
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