America is coming close to a precipice here, folks. From the AP:
NEW YORK (AP) — Egan-Jones, an independent credit-research firm, downgraded its rating on U.S. government debt to AA- from AA on Friday, citing the Federal Reserve's plans to try to stimulate the economy.
The credit rating agency said the Fed's plans to buy mortgage bonds will likely hurt the economy more than help it.
The plan will weaken the value of the dollar and push up prices for oil and other commodities, Egan-Jones said. That would leave less for consumers to spend on other things.
But at the same time, Egan-Jones warned that the federal government's borrowing costs are likely to slowly rise as the global economy recovers.
On Thursday, the Fed said it would buy $40 billion of mortgage bonds a month to help the economic recovery.
It's the second time the Haverford, Pa. shop has downgraded U.S. government debt in five months. In April, Egan-Jones lowered its rating on the U.S. to AA from AA+. It stripped the U.S. of a top AAA rating in July 2011.
This is about America’s ability to handle its debts and Bernake’s recent announcement that he planned to stimulate the economy by printing money. This means Bernake planned to make each and every person in America poorer in terms of purchasing power, and it also meant that every person holding American debt would find the value of that debt reduced. This is not how you pay down the debt; you pay it down by raising revenues and paying it. I’ll skip the debate on how to raise revenues for now.
This falls at the feet of President Obama, or as I like to call him, President Downgrade—a title he has earned again today. Obama will surely point to the fact that Bush Jr. first appointed Bernake, but Obama renominated him and by all means if people want to argue we shouldn’t vote for anyone who appointed Bernake, I’m all for it.
Someone joked the other day that its not a matter of if this nation can survive four more years of Obama’s policies, but four more days. That joke is far less funny today.
We have been drunk on debt for the last few years, but the barkeep is finally calling the tab. If we don’t change direction, this won’t end well.
Sorry to bum you out on a Friday. I for one was having a pretty darn good day up until now.
