According to the Wall Street Journal, Moody’s Investors announced that it may very well downgrade the U.S.’s credit ratings in the future if it doesn’t get its act together.
Moody’s said the U.S. and Great Britain may test the boundaries of their triple-A sovereign ratings due to deteriorating public finances, although Moody’s said it doesn’t see an immediate threat to the ratings of any of the 17 nations for which it has a triple-A rating.
What does it mean? Basically, it means the same things as when your credit score goes down. Borrowing is harder and people are less likely to trust you, with all the consequences that lack of trust can bring about.
In fact, if you want to have an idea of what happens to countries that see their credit ratings go down, follow what happens to Greece in the next few months.
Fitch Ratings downgraded its credit rating on Greece to triple-B-minus from single-A-minus, highlighting “concerns over the medium-term outlook for public finances given the weak credibility of fiscal institutions and the policy framework in Greece.”