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US COMPLETELY LOSES PERFECT CREDIT RATING FOR FIRST TIME IN OVER A CENTURY
Moody’s Ratings downgraded the U.S. government’s credit rating on Friday, citing repeated failures by successive administrations to control the country’s growing debt. The agency lowered the rating from its highest grade, Aaa, to Aa1, noting that while the U.S. still benefits from key strengths—such as a dynamic economy and the global dominance of the U.S. dollar—its fiscal outlook has significantly deteriorated.
Why It Matters
The shift means the United States no longer enjoys a fully stable top-tier rating from any major agency for the first time in more than 100 years. Moody’s becomes the third and final major credit agency to reduce its assessment of the federal government’s creditworthiness. Standard & Poor’s made its first-ever downgrade in 2011, and Fitch Ratings followed in 2023.
What to Know
In its announcement, Moody’s—led by chief economist Mark Zandi—projected the federal deficit will rise to nearly 9% of GDP by 2035, up from 6.4% in 2024, driven by:
- mounting interest payments,
- rising entitlement costs, and
- sluggish revenue growth.
Moody’s also warned that extending President Donald Trump’s 2017 tax cuts—now a key priority for the Republican-led Congress—would add $4 trillion to the federal primary deficit over the next decade. Political gridlock remains a major obstacle to fiscal reform, with:
- Republicans opposing tax increases, and
- Democrats resisted spending cuts,
leaving little room for bipartisan solutions.
What to Know About the Three Major Credit Agencies
The three major credit rating agencies—Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings—play a critical role in assessing the creditworthiness of sovereign nations, including the United States. These agencies assign ratings that influence:
- borrowing costs,
- investor confidence, and
- global economic perceptions.
A top-tier credit rating signals low risk, while a downgrade can lead to increased borrowing costs and financial instability.
Historically, the U.S. maintained a perfect credit rating from all three agencies for decades, reflecting the country’s economic strength and political stability. That changed in 2011 when S&P downgraded the U.S. from AAA to AA+ following a contentious debt ceiling standoff. Fitch followed in 2023, citing fiscal deterioration and repeated political brinkmanship. Moody’s had been the last to maintain a stable AAA rating—until now.
- Moody’s, founded in 1909, is the oldest of the three.
- S&P, established in 1860, is known for its market indices and ratings.
- Fitch, founded in 1914, is the smallest but still influential.
Together, these agencies hold immense sway over global finance, and their recent assessments of the U.S. reflect growing alarm over debt levels and political instability.
What People Are Saying
🔹 Democratic strategist Chris Jackson posted on X (formerly Twitter):
“BREAKING: In a stunning move, Moody’s has downgraded the U.S. credit rating from Aaa to Aa1—for the first time in history. That’s right: the only major credit agency that hadn’t downgraded us under Trump just did. Who else enjoying all this ‘economic winning’ under Trump?”
🔹 Steven Cheung, assistant to President Trump and White House Director of Communications, replied:
“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his ‘analysis’ seriously. He has been proven wrong time and time again.”
@ Newshounds News™
Source:
Newsweek – Moody’s Downgrades U.S. Credit Rating
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CHINA SELLS $19B IN U.S. TREASURIES AS TRADE WAR ESCALATES
Beijing Cuts Holdings Amid Tariff Tensions and U.S. Credit Concerns
China has significantly reduced its holdings of U.S. government debt, shedding $18.9 billion in Treasuries in March, according to newly released data from the U.S. Department of the Treasury. This move aligns with rising tensions in the ongoing U.S.–China trade conflict.
Sharp Drop in Holdings
- China’s Treasury holdings fell to $765.4B in March, down from $784.3B in February.
- This is one of the steepest monthly reductions in recent years.
- China is now the third-largest U.S. debt holder, behind the U.K. and Japan.
This reduction comes amid growing speculation that China may use its U.S. debt holdings as a geopolitical tool—or to reduce risk as bilateral relations deteriorate.
Trade War Fueling Financial Maneuvers
China’s actions follow the U.S.’s aggressive tariff measures, which have escalated into what many now consider a de facto trade embargo, with tariffs exceeding 100% on some imports.
Chinese economist and former central bank adviser Yu Yongding commented:
“China must have a set of countermeasures through repeated scenario planning to safeguard the security of its overseas assets.”
Global Credit Concerns Deepen
China’s debt selloff coincides with mounting concerns over the U.S.’s fiscal health:
- Moody’s downgraded U.S. debt from ‘AAA’ to ‘Aa1’, citing unsustainable debt levels.
- Interest payments and debt ratios are now “significantly higher than similarly rated sovereigns,” Moody’s warned.
Interestingly, China increased its U.S. Treasury holdings by $20B in February, despite the early tariff rounds. March’s reversal signals a shift in strategy as tensions spike.
@ Newshounds News™
Source: Full article on Bitcoin.com
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