Egan-Jones Cuts U.S. Credit Rating

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Take off your bedroom slippers. Put on your marching shoes. Shake it off. Stop complainin’. Stop grumblin’. Stop cryin’. We are going to press on. We have work to do.

~ Barack Obama

Egan-Jones cut the U.S. credit rating to AA with a negative rating from an AA+. It’s the second downgrade in nine months. This does not bode well.

In February, S&P said if we did nothing, they might downgrade us within six months. With our debt to GDP ratio nearing 112%, a new debt ceiling breach approaching, and no budget plan in place, Egan-Jones is only the first, not the last, to downgrade us.

Last time S&P downgraded the U.S., the DOJ tried to stop it and then, when that didn’t work, they ordered an investigation of S&P.

Egan-Jones, one of nine approved credit rating agencies, has been critical of the other agencies for not downgrading the U.S. when it was clear we should have been.

U.S. debt has increased to 100 percent of gross domestic product, while debt climbed 23.6 percent from 2008 to 2010, the credit-rating firm said in a statement today. Egan-Jones lowered the U.S. grade to AA+ in a July. Treasuries have gained 4.6 percent since the company first lowered the U.S. rating, according to Bank of America Merrill Lynch index data.

The downgrade was based on “the increasing debt load coupled with the fact that there has been no tangible progress in addressing the country’s growing debt to GDP” ratio, Sean Egan, president of Egan-Jones in Haverford, Pennsylvania, said today in a telephone interview. “Unfortunately, the debt is growing fairly rapidly while the GDP is not.”

Standard & Poor’s cut the U.S. grade by one step to AA+ on Aug. 5 and has a negative outlook on the country’s debt. Moody’s Investors Service and Fitch Ratings assign the nation their top Aaa and AAA ratings respectively and also have negative outlooks…

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