S&P, one of the big three credit rating agencies, just dropped America’s AAA Credit Rating, a first in history. I wonder if democrats and the talking heads on the cable news networks will now start referring to S&P employees as terrorists. Because after all, anyone who critiques America’s wildly reckless spending habits is a terrorist based on last week’s criticism of the Tea Party and Republicans for pushing fiscal prudence in the debt ceiling debate. I saw several news clips of fiscal conservatives being referred to as terrorists; it became so embarrassing for the party, that Obama had to actually come out and say it should stop.
List of Countries With AAA Credit Ratings
We can now look at all these countries as our superior in creditworthiness – truly the decline of an empire. The following countries are all holders of AAA ratings as of the time of this writing:
Isle of Man
Yes, the Isle of Man now has a higher credit rating than the United States…
Government Meddling in Credit Ratings
All three agencies have threatened over the past several months that they were considering downgrading the US’s vaunted AAA rating given our fiscal trainwreck brewing. If our current deficits, our debt-to-GDP ratio and our stagnant economy don’t put the scare into you, take a look at this chart on what the media ISN’T telling you about the debt ceiling debate (hint: our future fiscal gap is a number so large, you’ve never heard it mentioned in the mainstream media). Evidently, the administration has been in contact with each of the ratings agencies over the past several months, surely pressuring them to just shut up about our debt. See, if the politicians can’t reign in government spending, and Americans continue to vote for politicians that won’t get the job done, then at least the ratings agencies can force some fiscal sanity. So today, when S&P was on the verge of announcing its official downgrade, the administration “leaked” information in a pathetic last-ditch attempt to discredit the company, claiming that their projections were off by Trillions. Well, when our fiscal gap is in excess of $100 Trillion, what’s a couple Trillion between friends? S&P went ahead with the downgrade anyway.
What A US Downgrade Means
Surely, the administration will be in major disaster recovery mode, probably again going to the well and blaming “the failed policies of George Bush” for the downgrade, even though Obama’s spent $4Trillion on his watch only to see the unemployment rate actually rise WHILE a record number of Americans have actually dropped out of the labor force – hint: the real unemployment rate would be over 12% during any other recent period, but so few Americans count in the denominator the the headline rate is artificially low. People have simply given up. They’ve gone back to school, gone onto the street, moved in with mom and dad – but they’re not looking so they don’t count. Leading into this week, we had seen mortgage rates hit incredible new lows, they may well run up again if Treasuries sell of.
Why I’m Glad the US is No Longer AAA
I’m not the first person to cite America’s growing debt problem but I’ve been consistent and on point. And now that we’re here, we may very well see interest rates rise and a whole cascading effect of consequences we haven’t yet begun to contemplate. This will be painful for all of us. Heck, I’m about to close on my first rental real estate deal and that could very well be pulled if the credit market goes to hell again like what we say in 2008. We may all feel some pain… but this is what it took to wake up Americans, politicians and investors in US Treasuries. Perhaps this was the ONLY means to enact some real change and in seeking to regain the vaunted AAA status, America will be forced to improve its fiscal behavior so that our children don’t have to live as debt slaves to the selfish behavior of our generation. Until now, we have been embarking on overt generational theft. This may finally force the change needed to return this country to greatness. That is, unless the politicians shrug this off as “that’s only one of the three ratings agencies…so they clearly must be crazy” and continue to kick the can down the road.