Moody’s Investor Service has weighed in on the resolution of the US “Fiscal Cliff” that was approved yesterday.
Preliminary calculation by Moody’s estimate US Debt/GDP ratio to peak at 80% in 2014 based on $4 Trillion of tax revenue over the coming decade. Even if we accept Moody’s baseline scenario of a $4 Trillion revenue as doable, Moody’s themselves believe that the resultant Debt/GDP will not be sustainable against sudden shocks. As a result of this estimate, Moody’s predict that US will be forced into further action in order to preserve their Aaa rating.
Debt limit will be raised eventually, despite what Obama and Democrats want, with risk of default on Treasury bonds “extremely low”.
Click Here For Full Moody’s Statement
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