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Moody’s Weighs in on Cliff Deal



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Exhibiting its usual bear-trap grasp of the obvious, Moody’s says that further action will be required to stabilize U.S. debt. The rating agency also seems to believe that meaningful action in the near future is likely, about which I have my doubts.

Moody’s Investors Service said that the fiscal package passed by both houses of Congress yesterday is a further step in clarifying the medium-term deficit and debt trajectory of the federal government. It does not, however, provide a basis for a meaningful improvement in the government’s debt ratios over the medium term. The rating agency expects that further fiscal measures are likely to be taken in coming months that would result in lower future budget deficits, which are necessary if the negative outlook on the government’s bond rating is to be returned to stable.

Read it here.



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