Gone4Good
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Sep 9, 2005
- Messages
- 5,381
While technically correct, I think that misstates the nature of the debt ceiling debate.
"Technically" is all that matters to the credit rating. "Probability of default" is a pretty straightforward thing. It doesn't care why you might not pay (i.e. don't have the money, or don't have the votes). It is what it is. And what it is, is higher now that we've decided to use the debt ceiling for negotiating leverage. This also means our credit quality is lower.
And if anyone thinks this won't happen again, just listen to Mitch McConnel talking to Larry Kudlow
What we have done, Larry, also is set a new template. In the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore. This is just the first step. This, we anticipate, will take us into 2013. Whoever the new president is, is probably going to be asking us to raise the debt ceiling again. Then we will go through the process again and see what we can continue to achieve in connection with these debt ceiling requests of presidents to get our financial house in order