DEBT MAN WALKING

Posted: August 8, 2011 in Debt
Tags: , , , , , , ,

AAA to AA+

FIRST TIME IN AMERICAN HISTORY

Debt

The stunning decision by Standard & Poor’s on Friday to downgrade the long-term credit rating of the United States government to AA+ from AAA will likely raise questions about investor confidence in the economy and throw equity markets into more turmoil. What is so stunning is that it happened so quickly, financial market consensus was our debt would be downgraded within the next year if Obama didn’t address the debt issue.

So how’s that HOPE & CHANGE working?

Standard & Poor’s warned that the agency could downgrade U.S. debt a notch lower in the next six to 24 months if Congress doesn’t cut another $1.6 trillion over 10 years to reach the $4 trillion figure.

The probability of another downgrade is 3-1 odds, he said.

Asked whether the U.S. can regain its triple-A rating, Standard & Poor’s said the five governments that did achieved it in 9 to 18 years.

The great unknown is, how will U.S. stocks (which have already been hammered over the past two weeks) respond to this shocking development? And will there be a long-term lingering impact on stock price performance going forward?

  • Saudi market was off 5% on Saturday.
  • Israel off 7% Sunday.
  • Currently our futures market is off 230 points (Sunday).
  • Asia is off 2% Sunday.
  • China off 4% Sunday.
  • Hang Sing off 4% Sunday.

The federal government makes about $250 billion in interest payments a year, so even a small increase in the rates demanded by investors in United States debt could add tens of billions of dollars to those payments.

Barney Frank ranking member of the House Financial Services Committee is outraged. Really? Where was Barney when he was riding the coattails of Fannie Mae, and taking in all the money from them when they were cooking the books to the tune of billions of dollars. During the Bush Administration there were numerous attempts to reign in Fannie Mae, by conservatives showing how there would be a bailout if that didn’t happen. Barney, why are you surprised about the downgrade and your fellow cronies now?

  • We are bailing out Fannie Mae and Freddie Mac at the cost to US Taxpayers at a clip of tens of billions of dollars each year.
  • This administration parties like it’s 1999. SPEND, SPEND, SPEND.
  • The American people have had it with Washington Politics. I’m tired of being hosed!

Chinese economists said the U.S. credit rating downgrade by Standard & Poor’s poses great risk to financial markets and expect it to prompt China, the world’s biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings.

So who’s going to finance the US runaway debt? Probably our Treasury Department who will do QE3 and keep printing money, and printing money, and printing money. What that means for you and me. Higher prices, Inflation is coming, get ready.

Tennessee Ernie Ford would be proud Sixteen Tons of Debt…

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store

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  1. […] from Treasury shows the debt has now hit $14.639 trillion. It’s the most rapid increase in the debt under any U.S. president. “Obama will have added more to the national debt by the end of his […]