The U.S. could suffer another credit downgrade, similar to the Standard
& Poor's decision to strip the country of its coveted AAA rating in
2011, says Bill Gross, founder of Pimco, manager of the world's largest
bond fund.
The U.S. is running a structural deficit, a deficit a country would post even while running at full capacity, that is seriously jeopardizing the country's health. Until the government addresses massive liabilities, the country is headed for another downgrade.
Standard & Poor's currently rates the country at AA, while Moody's rates the country at AAA.
"Let's look to the liability structure of the United States. It's not just $15 trillion in terms of current debt, but it's probably three to four times that in terms of Medicare and Medicaid and Social Security," Gross tells CNBC.
"Unless the United States begins to make some inroads, that's called the structural deficit that the CBO and the IMF basically identified as, perhaps 6 percent to 7 percent to 8 percent greater than any other country other than Japan and the United Kingdom — until we address that structural deficit, yes, we're headed to that territory."
Adding to the country's more short-term woes is a fiscal cliff fast approaching.
At the end of this year, the Bush tax cuts are set to expire while automatic spending cuts are due to kick in, a combination that will immediately siphon hundreds of billions of dollars out of the economy and threaten to counter what little growth the economy is posting.
The U.S. is running a structural deficit, a deficit a country would post even while running at full capacity, that is seriously jeopardizing the country's health. Until the government addresses massive liabilities, the country is headed for another downgrade.
Standard & Poor's currently rates the country at AA, while Moody's rates the country at AAA.
"Let's look to the liability structure of the United States. It's not just $15 trillion in terms of current debt, but it's probably three to four times that in terms of Medicare and Medicaid and Social Security," Gross tells CNBC.
"Unless the United States begins to make some inroads, that's called the structural deficit that the CBO and the IMF basically identified as, perhaps 6 percent to 7 percent to 8 percent greater than any other country other than Japan and the United Kingdom — until we address that structural deficit, yes, we're headed to that territory."
Adding to the country's more short-term woes is a fiscal cliff fast approaching.
At the end of this year, the Bush tax cuts are set to expire while automatic spending cuts are due to kick in, a combination that will immediately siphon hundreds of billions of dollars out of the economy and threaten to counter what little growth the economy is posting.
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