Debt Ceiling Time Bomb

As the Republicans and Democrats play chicken over raising the $14.3 trillion US national debt limit before the August 2 deadline, Fitch Ratings was the first of the big three ratings agencies to warn that it would downgrade all ratings for US Treasury securities into 'junk' status if the US stumbles into technical default. Moody's and Standard and Poor's issued similar warnings about reducing US ratings, but not with such forcefulness. Fitch noted that should the US debt ceiling be raised later, the 'junk' ratings would rise, but probably not to the current AAA level.

If Democrats and Republicans remain at impasse by August 2, Fitch would tag US ratings as 'watch negative.' The first test for ratings will come on August 4, when $30 billion worth of Treasury bills mature. If the government failed to repay them in full, Fitch will lower the rating on those specific securities to B-plus, four notches into junk status.

That would be just the opening the yuan needs...