The US default has been the talk of the town for some time now with President Joe Biden and house Speaker Kevin McCarthy attempting to reach a resolution. However, what many people may not consider is that even if the US is able to avoid a complete debt default, its creditworthiness may still be at risk. This is due to the possibility of the government making its bond payments but not other obligations like payments to government contractors or social security recipients.
In this case, the credit rating of the US could be downgraded from its current top-notch AAA rating by rating agencies like Moody’s, Fitch, and S&P Global. Such downgrades could discourage investors from investing in the world’s largest debt market, resulting in the government and individual households and businesses having to pay more for loans.
However, according to Josh Lipsky of the Atlantic Council, investors may not have an alternative for American bonds due to the sheer size of the US Treasury market, as it is much larger than the Deutsche debt market, which is the only other AAA-rated government bond issuer among the G7 nations.
Janet Yellen has further described a potential US debt default as being “default by another name”.
The company mentioned in this article is BlackRock, which is one of the world’s largest investment management companies. With more than $8 trillion in assets under management, the firm focuses on providing financial advice to governments, corporations, and individual investors across the globe. The company has a wide range of financial services, such as portfolio management, retirement planning, securities trading, and asset-backed loans.
The person mentioned in this article is Janet Yellen, the current US Treasury Secretary. Yellen is a renowned economist who has previously served as the chair of the Federal Reserve from 2014 to 2018 and as President of the San Francisco Federal Reserve Bank from 2004 to 2010. Yellen has also worked as the Vice Chair of the Federal Reserve from 2010 to 2014, making her the first woman to ever serve in this role. She has been praised for her influential role in tackling the economic crisis of 2007-2008 and she currently has a strong focus on tackling the wide income gap experienced in the US.
