The American and UK governments should ask their citizens what happens when your credit rating drops. We could tell them that our loans will cost us substantially more and usually money that we can't afford.
According to Moody’s Investors Service the U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose.
Pierre Cailleteau, managing director of sovereign risk at Moody’s in London, said in a telephone interview that the governments of these two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly .
Cailleteau said “we expect the situation to further deteriorate in terms of the key ratings metrics before they start stabilizing.” “This story is not going to stop at the end of the year. There is inertia in the deterioration of credit metrics.”
The U.S. could pay about 15 percent of revenue in interest payments. More than the 14 percent limit that would lead to a downgrade to AA.
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