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U.S. Credit Downgrade "Inevitable."

Only seven days stand between the U.S. and the effects of a credit default. But a downgrade of the nation’s stellar AAA credit rating seems a lot more likely, and a lot sooner.

The White House had been alerted repeatedly over the past month by rating agencies that without a strong, long-term plan to restructure the country’s debt, they would lower America’s credit rating as soon as this Friday, according to two officials familiar with the process. The White House was warned that the deal would have to be significant—and not a short-term fix over the next few days to avoid a credit drop.

Posted ImageAnalysts with Moody’s and Standard & Poor’s, the nation’s top two rating agencies, declined to be quoted on the record, indicating that even benign statements about timing and ratings decisions can rattle markets and startle investors. But earlier this month, both agencies placed the U.S. government on notice of a downgrade of at least one notch, if not more, to a AA rating. In a written statement, S&P analysts said they believed “there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling.”

http://www.thedailybeast.com/articles/2011/07/25/u-s-credit-rating-drop-inevitable-
even-with-deal-to-stave-off-default.html

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