Posted on 03/28/2010 12:17:48 PM PDT by Conservative Coulter Fan
America’s current predicament is that it borrows money from countries or individuals to finance many of its expensive obligations, including financing the $862 billion stimulus bill as well as the wars in Iraq and Afghanistan. But what would happen if America had to pay higher interest rates on all future borrowing? This is the question that some people in the federal government have to ponder, as influential rating agencies such as Standard & Poor’s and Moody’s have both recently voiced their view that America’s AAA rating is not guaranteed or in fact even assured. The massive and growing debt obligation makes some professionals question whether this country’s rating may soon be lowered.
A downgrade in America’s credit risk would mean paying higher interest on additional borrowing, thus making borrowing much more expensive. Just as importantly, it would signify a change in perception of quality about the American economy and by extension of the world economy.
Moody’s softened the impact of their statement by being clear that a downgrade is not likely but just a possibility, and similarly Treasury Secretary Timothy Geithner has said that he is confident that that will not happen. The purpose of talking about this unpleasant possibility is to remind policymakers in Washington that it is important to address America’s fiscal deficit and debt. However, the fact that this possibility is being talked about and discussed should be seen as a warning, if not an ebbing sign for concern.
Although the federal government has trillion dollars of debts to pay off and for the last couple of years America has had a budget deficit, it is difficult for Americans to imagine U.S. debt as being anything but totally risk free. Yet this just might be the reality America may one day face if politicians in Washington continue to spend with reckless abandon, seemingly funding everything in sight, and with little regard for how much money they actually have to work with.
Aleksey Gladyshev currently is a member of the Young Leaders Program at the Heritage Foundation.
They want to destroy our economy and country so we all have to be supported by the government. That way, they can control every aspect of our life and be beholden to them....
Of course not. Congress has its lusty eyes on the trillions of dollars in 401K plans.
Does a BEAR poop wherever it wants too?
To answer the question: BIG-time trouble!
If the triple A rating isn’t in trouble, somebody’s not paying attention.
Of course, but because of government pressure it’ll be dropped after its obvious to everyone, even kool-aid drinkers, that its a sham.
An economic-socio-politico tsunami is going to hit this country and nobody is building an Ark for us. These laws and entitlements and government structures are their version of an ark, they hope the survivors will keep them. Of course, that will be impossible.
When the money runs out they will have to slash welfare and social security benefits and everything else. There will be rioting and all kinds of other things. Businesses will be closing like never before, food shelves will be close to bare.
There will be nothing left to tax, the middle class will have been destroyed. There will be government media and government troops blaming capitalism of course. I just doubt its going to get them far.
Man does the Bush deficits look like a dream in that graph.
“Obama, Reid and Pelosi just threw another $1 trillion dollars in debt on top of it.”
More likely, it will be a lot more than that.
Of course it is.
Moody’s warned of this before deathcare passed.
Of course, if Moody’s is warning now, and did NOT catch the financial mess of 2008, what does that say?
We are in deep trouble of exactly that, loosing AAA.
Then all of those Arm resets coming down the pike will REALLY kill the housing market.
“There will be nothing left to tax, the middle class will have been destroyed.”
This, I believe, is the fundamental issue. The nail in our coffin, if we don’t stop this insanity.
Are we in trouble? Yes.
Unfortunately, the people in a position to do something about it won’t.
Have a nice day.
We would be better off if they had to pay junk bond rates. If they can’t sell our debt, then they can’t borrow.
You bet your sweet bippy we are in trouble. The Chinese can OWN our real estate and considerable access to our natural resources almost without firing a shot.
And don’t worry about having a work force to extract these natural resources. They have plenty of young male overseers to assure the process goes smoothly (for them).
The dollar will be dirt before this is over.
According to Paul Ryan it is going to be more like 2.5 trillion
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