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Implications of a US Downgrade

Barack Obama has signed into lawa bill to raise the debt ceiling, preventing a default on U.S. government bonds or other obligations.

But despite a resolution on the debt-ceiling debate, Moody’s and Standard & Poor’s might decide that the deal has failed to produce a longer-term solution to the U.S. debt burden. A downgrade from our triple-A credit rating might still be in the offing.

So what happens next? Do global markets sell Treasurys? Do mutual funds, insurance companies, pension funds, individual holders, and central banks have to sell? Does the Federal Reserve ride to the rescue?

You might be surprised by some of the possible answers. Click ahead to see what happens if the U.S. credit rating is downgraded.

By John Carney
Updated August 2, 2011