Gulp: U.S. to lose AAA debt rating?
posted at 8:16 am on May 22, 2009 by Allahpundit
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I guess my question would be, if we haven’t lost it already, how fantastically huge would our annual deficits have to be before we do lose it? $3 trillion? $4 trillion?
Something for Obama to shoot for now that national health care’s on the way.
“It’s very important that this Congress and this president put in place policies that will bring those deficits down to a sustainable level over the medium term,” Geithner said in an interview with Bloomberg Television yesterday. He added that the target is reducing the gap to about 3 percent of gross domestic product, from a projected 12.9 percent this year.
The dollar extended declines today after Treasuries and American stocks slumped on concern the U.S. government’s debt rating may at some point be lowered. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade…
It’s “critically important” to bring down the American deficit, Geithner said.
It’s “critically important,” and by The One’s own admission our debt is “unsustainable,” and yet his two attempts at reducing spending thus far produced an initial budget cut of .0029% followed by a further cut of roughly one-half of one percent, later cannibalized by an upward revision in spending. Believe it or not, S&P was sounding alarms about America’s debt rating eight months ago, after the financial crisis first hit and Bush dumped $85 billion in AIG’s lap. Trillions of dollars in bailouts and stimulus later, with enormous new entitlements on the way, the problem’s considerably worse — and yet The One’s defenders insist there’s technically zero risk of a lower rating because the U.S. could simply print more money to pay off its debt and avert any looming default. Which, as far as I understand, means we’re facing the following choice eventually: Either increase the monetary supply to meet our obligations and risk massive inflation, or refuse to meet our obligations and suffer a lower debt rating, thereby triggering even more massive deficits. What am I missing here?
Fortunately, The One has a super secret plan by which nationalizing health care will actually bring down spending, so let’s look forward to that.
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Check out The Market Ticker, and go down to “CBs and ‘Real Money’ had enough?”
This guy thinks we are weeks away from a bond market collapse. God help us. Spending reductions aren’t even on the Congressional radar so the only option they’ll have are massive tax increases.
I’m guessing that means no more 401(k) exemptions. No more mortgage write-offs. Big increases in income and capital gains taxes, and FICA withholdings. Hold onto your wallets, everyone.
TheMightyMonarch on May 22, 2009 at 4:30 PM
Turned on Beck… This is his topic today.
petunia on May 22, 2009 at 5:02 PM
What happened to that BS from the campaign abount eliminating the deficit?
Resolute on May 22, 2009 at 5:08 PM
Seven Percent Solution on May 22, 2009 at 5:26 PM
Good overview of where we’re headed, how we got here, and the two main alternatives at http://www.businessinsider.com/the-dollar-crisis-inflation-or-deflation-2009-5 :
CK MacLeod on May 22, 2009 at 6:10 PM
Then what the hell do we need Chinese overlords for?
Speakup on May 22, 2009 at 6:15 PM
Does this mean we don’t get our unicorns?
HornetSting on May 22, 2009 at 6:36 PM
Dat’s right, Buckwheat! No unicorns, no rainbows, no lollipops, no sunshine, no hope, no change, no free mo-gage, no free cah-payment, no free cred card, no free jimmychoos. You ain’t gettin nun but sh*t. You gettin the shaft. Ha ha ha ha ha.
/Dat’s what the Prez say behind close do wif Michelle. And Rahm be in the closet and he be watchin them bumpin fist!
Sorry folks, I’m just growing weary.
Key West Reader on May 22, 2009 at 6:42 PM
As I saw on a bumper sticker somewhere…”You think healthcare is expensive now? Just wait till it’s FREE“
AZ_Mike on May 22, 2009 at 6:59 PM
Tru dat. It is hurricane season, however. I figure the Katrina survivors that are getting evicted are just waiting for another storm to come so they can stay in gubmint housing for another four or five years.
BTW, be safe, Key West.
HornetSting on May 22, 2009 at 7:54 PM
I’m invested in Gold – real Gold – not Gold-backed stocks.
By the time folks realize that the hopenchange is one way ticket to hell – it’ll be too late to turn around. Buy Gold – that way you can buy whatever comes after the dollar is destroyed.
And it will be.
HondaV65 on May 22, 2009 at 8:56 PM
What super-markets take gold as payment? <– rhetorical
cryptojunkie on May 22, 2009 at 10:06 PM
Sad to say, I’ve been coming to that conclusion as well.
Ann NY on May 23, 2009 at 8:57 AM
In that sense it’s a really good time to buy a house. Buy one that is huge with a huge payment, when you’re earning $100,000 a week a $12,000 a month payment won’t be such a hardship.
Ann NY on May 23, 2009 at 9:03 AM
Didn’t you know that when Obama promised to help the middle class, he meant to help us achieve a nice below the poverty level status?
jimmy2shoes on May 23, 2009 at 10:48 AM
I read on Drudge this morning that Obama has admitted that we’re “out of money” . . . but of course he’s blaming it on everybody and everything under the sun except himself. Hold your breath people we’re going down.
rplat on May 23, 2009 at 11:03 AM
Drudge just posted some excerpts from a C-SPAN interview with Obama where he basically said “we’re out of money”
“We’re out of money”
WTF?
He actually said what’s been true for decades. The federal government is out of money.
He actually acknowledges that increasing costs for Medicare and Medicaid are a huge problem.
No bailouts for the states. The states are going to have to make some hard decisions.
He’s acknowledging that tax revenues are going down while government demand for services are going up, and that’s not a good thing.
WTF??????!1111
Is he schizophrenic or something? Where has the somber, fiscally responsible side of this guy been?
Of course, he’s wrong about the bailouts, and his reasoning on health care might suggest that single-payer is the solution and not a disaster waiting to happen, but still…
China’s talking about dumping the dollar and the bond market is screeching to a halt. No more debt financing. I’m wondering if he had what alcoholics refer to as a “moment of clarity”. We can only hope.
TheMightyMonarch on May 23, 2009 at 11:14 AM
Sure. Well, the people who voted this guy in there are all getting free stuff. Someone has to pay for it which is where the problem started form to being with. Handouts galore.
johnnyU on May 23, 2009 at 5:24 PM
+1 I was wondering that myself
bitsy on May 25, 2009 at 9:48 AM
He may as well blame the NK nuke on our healtcare system.
Obviously Obooba’s goals are, among other things, to destroy our economy and force US citizens into nationalized medicine. By blaming the economy on healthcare problems (which are being woefully misrepresented), he is enlisting a strawman of epic proportions.
Strawman arguments reveal weakness in either the argument or the man. In this case, it’s both.
Akzed on May 25, 2009 at 11:19 AM
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