Every Major Credit Agency Prepares to Downgrade U.S.

Just in case Moody's and S&P didn't frighten you enough, Fitch credit agency has added itself to the list of groups planning to downgrade the United State's triple-A rating if the debt ceiling is not raised by August 2. Per The Hill:

First, the rating would be placed on Credit Watch Negative -- a move already adopted by fellow rater Standard & Poor's. Two days after the deadline, the Treasury has a $90 billion bond due to mature. If the government does not pay in full that bond, Fitch would immediately knock the rating down several notches to B-plus -- the highest possible rating for a nation in default.

If additional payments were missed, the agency would lower the rating on that bond to 'RD' -- meaning a "default is imminent or inevitable" -- and then lower all other Treasury debt to B-plus.

Despite warnings, a segment of Republican politicians insist no harm will come if August 2 goes without raising the debt ceiling. Serious presidential contender Michele Bachmann used her first campaign ad to promise that she will not vote to raise the debt ceiling. Bond markets remain stable, but the deadline to reach a deal is fast approaching. On Friday, Ezra Klein detailed how the Treasury Department defaulting on its obligations would trickle down to the rest of the country. If the U.S. loses its triple-A rating, interest on Treasury notes will rise. "Mortgages rates will jump, car loans will be harder to come by, universities won’t be able to float bonds, cities won’t be able to fund themselves," Ezra wrote. The Republicans who believe a temporary default is without consequences are in for a rude awakening if Fitch, Moody's, and S&P are forced to follow through on their word.

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