I’m not normally a bettin’ man, but while the Congress keeps arguing, I’m going to put money (figuratively anyway) on the fact that there will be: a hike to the debt ceiling by Tuesday’s Aug. 2 deadline, and a credit downgrade to AA from AAA on U.S. Treasury bonds.
Whether there will be anything accomplished in tackling the budget deficit is still up for grabs.
Frankly, if the ratings agencies don’t downgrade U.S. debt, it will be just another shocking example of their inability to really understand what’s happening in the world. They have already proved, during the mortgage securities mess, that they aren’t exactly the best analysts on the planet, by a long shot. In this case, we deserve to have our debt downgraded simply because of the inability of our policymakers to get a handle on the budget deficit. How can the U.S. continue to cling to a AAA rating? It can’t right now. Read