Moral Outrage
Whew! God help us!

Another American credit downgrade predicted soon by BoA exec

“We expect a moderate slowdown in the beginning of next year, as two small policy shocks —another debt downgrade and fiscal tightening— hit the economy.

“The ‘not-so-super’ Deficit Commission is very unlikely to come up with a credible deficit-reduction plan. The committee is more divided than the overall Congress. Since the fall-back plan is sharp cuts in discretionary spending, the whole point of the Committee is to put taxes and entitlements on the table. However, all the Republican members have signed the Norquist ‘no taxes’ pledge and with taxes off the table it is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts.

The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes.”
[–So says Bank of America ML Ethan S. Harris, formerly chief U.S. economist at Lehman Brothers.]

This is quite a stunning prediction, mainly because nobody is talking about this. And the first downgrade did cause a major market jolt when it happened leading to a major blow in confidence.

[See full article at Business Insider]

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