Open Thread

For general discussion and debate. Possible talking point: U.S. to lose its AAA rating?

The dollar extended declines today after Treasuries and American stocks slumped on concern the U.S. government’s debt rating may at some point be lowered. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade...Gross said in an interview yesterday on Bloomberg Television that while a U.S. sovereign rating cut is “certainly nothing that’s going to happen overnight,” markets are “beginning to anticipate the possibility.” Nobel Prize-winning economist Paul Krugman, speaking in Hong Kong today, nevertheless argues it’s “hard to believe” the U.S. would ever default.

Is Gross right, or is he greatly exaggerating? If the full faith and credit of the U.S. doesn't deserve the highest rating available, whose does? After all, anything less than AAA suggests that entity could actually default. 

NB Staff
NB Staff