Whoops

A U.S. government backup debt plan to raise the country's debt ceiling and avoid imminent default could still lead to a downgrade of U.S. ratings in the next year or so, Moody's said on Tuesday.

Senator Mitch McConnell's "Plan B," increasingly seen as a "Plan A" in Washington, would avoid any immediate downgrade of the coveted U.S. triple-A rating, Moody's analyst Steven Hess told Reuters in an interview.

"But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don't seem to be very large," Hess said. "Therefore this plan might result in a negative outlook on the rating." From the desk of Zero Hedge News Watchers

The debate is shifting. Moody's now wants a big and immediate cut along with that big and immediate promise of $2T in tradeable treasuries.

Look at this from maximum entropy theory. If the US Congress is going to move big chunks around at low probabilities, then to maximize disorder, finance will need to trade Congressional debt around in big chunks at low probability. At any level, money needs to be traded on par size and frequency with real budgets, otherwise money cannot measure those things.

The quantum constraint on the whole thing is that the Senate has a minimum set of rates it needs to satisfy.