When US deficits support its triple-A

By Felix Salmon
May 28, 2009

From a narrow sovereign credit and ratings perspective, said Fitch’s David Riley, the huge spike in the US government deficit “is the right policy response”. His point was that we’re in a historically very rare period when both companies and households are deleveraging — they’re not borrowing, they’re not spending, and the government has to step in and make up the difference, lest we suffer an even worse recession and the destruction of massive amounts of value and potential economic growth.

If you’re worried about the ratings agencies’ view of the US government, then, (which you shouldn’t be), don’t worry about Fitch. Or at the very least, to the degree that Fitch does get worried about US creditworthiness, it would be even more worried were it not for the fact that the government is going to run a $2 trillion deficit this year.

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One comment so far

What rating did Fitch give MBS?

Excuse me, if I don’t take his imprimatur too seriously.

Posted by Marc | Report as abusive
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