Posted on 07/27/2011 12:35:07 AM PDT by greeneyes
Egan-Jones downgrades U.S. rating to AA+ from AAA
-Small ratings agency unlikely to have market-moving implications, but comes amid possible downgrades from larger ratings agencies.
-Egan-Jones cites rising debt-to-GDP ratio for downgrade rather than delay in raising the debt ceiling.
By Andrew Ackerman and Mark Taylor
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Egan-Jones Ratings Co. over the weekend lowered its rating on U.S. debt, the ratings firm's president, Sean Egan, announced Monday.
(Excerpt) Read more at nasdaq.com ...
Spending for politicians is like heroin to a junky.
To stop is going to cause a lot of pain.
To not stop simply leads to death.
It seems most would rather go blindly over the cliff.
Ask Democrats “if you were a Republican, what would you cut?”, and they may finally find some meaningful cuts...
And when there is little to none private sector growth, i.e. no more income, the higher debt should facilitate another downgrade.
Government borrowing is currently running about 10% of GDP. Or in other words, about 10% of our current “GDP” is borrowed dollars. Take those borrowed dollars out of the system overnight and you lose 10% of GDP overnight. So cutting spending will cause pain. Likely lots of pain. Either suffer the pain of borrowing detox or crash the system. It took decades to build this box we find ourselves in. Alice in wonderland economics...
“Take those borrowed dollars out of the system overnight and you lose 10% of GDP overnight.”
Which is why we’re in a depression not a series of recessions. We’re 5 years in this depression and it’s getting harder for the kleptocrats to deny. As long as they can pass on more debt to later generations they’ll keep stealing.
Its pretty scary when you think about the actual implications that 10% of current GDP is funny money.
If you don’t mind, do you know where that came from? I was wondering if I could use the figures?
http://www.usgovernmentspending.com/index.php
Seems close enough for horseshoes and hand grenades, i.e., for my purposes. I’m talking about complete elimination for most of them. For example, Dept. of Education and Welfare.
I think they did this at least a week ago. It didn’t affect things much as they are small. It is annoying when Obama etc ignore it though.
ratings that meet reality - let’s see, if I took out 250 million credit cards and maxed them all out, would I deserve a good credit rating? And don’t tell me the ratings are about the future not the past - past behavior predicts future behavior. Expand the tax base and unfetter the economy or we’re screwed.
Thank you. One mistake they make- what they call “Public Debt,” is actually what most call total debt, which includes non-public debt.
I remember the days in early 1982 when the “oil depression” hit Texas and the gulf coast.
I was sitting in the office looking at my accounts receivables and growing more alarmed by the day at just how high they were becoming. With what business I had left being added to the pile daily, it was growing larger and larger.
The problem was that I was looking at money that was not being received (nor, as I found out later that it never would) was piling on top of the good money. Eventually bankruptcy filings from my customers started coming in and it was at that time that I developed a firm grasp of “real world” cash flow and how to survive such a disaster.
The only reason I kept the business from going under was the fact that I NEVER financed it for any reason. It was built one dollar at a time and still survives after 32 years of operation. There was never anyone there to “call my note” from the banks.
Now, the whole Government is facing the same thing. Revenues are less than the expenditures. Simple as that.
The Government’s solution to the problem is to keep on spending but worse yet......it’s all financed and the interest expenses are rising faster that the funded debt. Now, they want to raise the credit limit so they can spend more by borrowing more. It’s like making the minimum payment on credit cards while the balance keeps going up as each payment is made. The end result will be simple bankruptcy. There is not way to prevent it while this attitude continues.
While this is a simple comparison of a small business to the government, the principle is a comparison of a private (for profit organization) verses a governmental entity (an appropriated funded entity) and how out of the real world our government operates.
The fact is that the debt our government owes will never be balanced due to the fact that government managers (elected officials) only pay attention to staying in office and that means satisfying the most important voters...THE LOUD ONES. The ones who make the most noise...not the ones who mind their manners and quietly present their needs and proposals.
Until we have two important constitutional amendments added, (1) the requirements for a balanced budget and (2) TERM LIMITS, will the problem ever be corrected.
I doubt that either one will ever be enacted simply because we have the fox guarding the hen house.
To stop is going to cause a lot of pain.
To not stop simply leads to death.
It seems most would rather go blindly over the cliff.”
I would seem so. What they are doing now is like playing that old game of hot potato.
Our politicians are like an economic Amy Winehouse.
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