Moody’s warns that the US credit rating could go down a notch (joining the S&P downgrade from last year) if the US fails to take appropriate medium-term action. They write as follows (via Politico):
“If those negotiations lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable,” Moody’s said in a statement. “If those negotiations fail to produce such policies, however, Moody’s would expect to lower the rating, probably to Aa1.”
In many ways this is not very helpful. One of the key disputes over budget policy is what will do most to help in various time frames. Some want immediate austerity while others prefer short-term growth to assist a medium term solution. Moody’s provides a warning to “get busy” but no one knows how they will evaluate various alternatives.
And who elected them, anyway? It is not as if the ratings agencies have a stellar record on such matters.
With this background in mind, there is a pretty easy, one-word solution to the Fiscal Cliff. Let us start with one of the helpful interactive tools from The New York Times.
The page shows the count of words spoken by each party at the conventions. These simple quantitative measure are often deceptive, but the tool provides key speeches and also something quite clever:
You can insert your own word and discover the count!
I invite readers to try their own words and share the results with us, but you have a tall order if you want to match my suggested word: Compromise.
The mentions were 2-1, and I mean actual count, not a ratio. The notion of progress through compromise is missing in action right now.
And that is the one-word solution. How long must we wait?
This post was originally published at A Dash of Insight and is reproduced here with permission.