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Moody's: Obama is wrong, U.S. won't default

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US President Barack Obama speaks during a press conference in the Brady Press Briefing Room at the White House in Washington, DC, on October 8, 2013, as the crisis over a US government shutdown and debt ceiling standoff deepens. Obama on Tuesday told House Republicans to stop making threats and pass a budget, which would bring an end to a crippling government shutdown. Credit: AFP/Getty Images

Hm. Whose word am I more inclined to take on this one...?

Via the Washington Post:

In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.

Not so, Moody’s says in the memo dated Oct. 7.

” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.

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