Yesterday, I told you a story about Sam’s debt problem to explain what is US Debt Ceiling. The story continues here.
When the debt ceiling is going to be reached, the “poor” and “moody” agency who used to rate Sam’s debt to be the best quality, now tells you that Sam’s debt is not so good after all.
To your horror, you just find out that this “poor” and “moody” agency used to give the same AAA rating for some CDO debt which was eventually defaulted.
So now is Sam going to default his debt for the first time in the history?
Luckily, because Sam owes money to so many people, he is a very influential person. He even has the power to change the law to raise the ceiling so he can borrow more. In fact, he has already done it many times in the past. Look at the historical chart below.
Now you feel much relieved right?
The story continues…