Posts Tagged ‘Howard Gold’

US Kissing AAA Rating Goodbye?

Friday, July 29th, 2011

I’m learning all kinds of new things from the Republican’s debt ceiling shenanigans. Here is Howard Gold on how avoiding a technical default might not be enough to prevent a downgrade of US Treasury bond ratings. The ratings agencies have warned that they “may lower the long-term rating on the U.S. by one or more notches into the ‘AA’ category in the next three months, if we conclude that Congress and the administration have not achieved a credible solution to the rising U.S. government debt burden and are not likely to achieve one in the foreseeable future.”

Does anyone watching the news this week think that Congress and the administration will have a “credible solution” to the US debt problem any time soon?

While I was writing this, my cousin that works on Wall Street called, all drunked up from a night with his boys on the town. He says that the backlash on the ratings agencies would be so intense that they wouldn’t dare downgrade the US credit ratings…but do the teabaggers really want to take that chance?

Ironically, one of the side effects of a US default would be increased borrowing costs…and by extension, a larger deficit.

Losing the AAA would probably hurt the economy through higher borrowing costs for the government, corporations and consumers, especially those who have adjustable-rate debt, and we’d likely see a stock market decline. But most of all it would be a terrible blow to our national pride and prestige, capping a decade of decline from the commanding heights we bestrode at the start of the millennium

In other words, higher national debt and a loss of international prestige brought to you by the people who came to power by complaining non-stop about the national debt and bemoaning the decline of America as a global power under Obama.

What a Country!