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October 23, 2011
Another debt downgrade for US on the way?
One Bank of America analyst thinks that another downgrade of America's debt rating is on the way when the "Supercommittee" blows up in late November or early December. Business Insider: In an analyst note, Bofa/ML Ethan S. Harris drops a bit of a bombshell prediction: 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...(Read Full Post)