The White House attacks Moody’s: cutting the rating? An anti trump move

The United States have also lost the last of the triples A, the credit of a country’s credit, and are no longer among the first of the class as for financial reliability. Friday 16 May after the closing of Wall Street (11 pm in Italy), Moody’s has announced the downgrading from AAA to AA1. It was the only one of the three large rating agencies to have maintained the highest vote. Standard & Poor’s had taken it off in 2011 and Fitch in 2023. After issuing a negative « outlook » (perspective) in 2023 now the downgradewith Outlook changed in stable.

At the base of the rejection are the concerns related to the mass of the debt, rising to 36,860 billion dollars, equal to $ 107,000 per citizen. But also the weight of interest. Moody’s provides for the deficit/GDP ratio from 6.4% to 2024 to 9% in 2035 and the debt/GDP ratio from 124% in 2024 to 134% in ten years. The note specifies that « in the last ten years the levels of debt and payment of the interests of the USA have been higher than the other countries that have triple A. The administrations and congresses in this period of time have not managed to reverse the trend, which led to a significant annual deficit ».

After the decision, The director of communications from the White House, Steven Cheung, targeted Moody’s Analytics Mark Zandi’s chief economist. « Zandi – he wrote on X – is a councilor of Obama and climate donor of the Clinton who has been a Never Trumper since 2016. Nobody takes his » analysis « seriously. It has been shown that he was wrong more and several times ».

Musk’s spending review does not work

Instead he agrees with the downgrade Carlo Cottarelli, director of the Observatory on public accounts of the Catholic University of Milan, who commented yesterday at the Adnkronos: « With a debt doubled in the last 20 years, the US do not deserve an AAA judgment and every way they remain with a high evaluation. What has so far kept is the high growth that helps the sustainability of the debt with a rise in the content debt relationship « , but » despite this in recent years the debt has grown a lot and Trump has inherited this situation. That the president risks worsening, with his tax cutting policy, which would be only partially compensated for the savings of the public administration that are at the top of the agenda of the new Department of Government Efficiency, the famous « Doge » led (so far) by Elon Musk, who is preparing to leave. But the result of the Spending review of Musk so far is disappointing: in front of two thousand billion cuts proposed by the patron of Tesla – almost a third of public spending – currently the official total is 170 billion, but three days ago the Financial Times He expressed doubts about the figure.

The rise in returns

On Friday afternoon, a few hours before the announcement of the downgrading, a taxing bill was under discussion in the Budget Committee in Washington promoted by Trump who according to his own Republican party companions would have led to an unsustainable increase in the deficit. The same afternoon, the yields of American government bonds, the so -called Treasury, rose to 4.6%, a level of almost a higher percentage point than the end of last summer. « We don’t believe that spending and deficit reductions with the law currently under discussion can be obtained, » commented Moody’s in the note that motivated the downgrading. On Monday at the opening of the markets we will see the reactions of the investors to an America that no longer has the triple A.

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