Tax & Financial Consulting Services
USA IS GOING BROKE
By Bob Bauman
USA is Going Broke...If you want to make yourself ill, stop and think about the deep economic and financial hole the politicians have dragged the United States into.
As of Friday, (Jan. 11, 2008), the U.S. government's national debt was worth US$9 trillion 200 billion devalued dollars, (and that number excludes billions in unfunded future entitlements).
And don't tell me that we "owe to ourselves," as sly Keynesian economists used to claim. Over 55% of the debt (and the interest on it) is owed to foreigners - a major share held by the government of Communist China.
How's that for capitalistic irony? So Nikita Kruschev was wrong when he predicted Communism would bury us - it's buying us instead.
If you've been reading the A-Letter, you already know the sad facts about the shrunken dollar, the bloated federal budget, the huge trade deficit, the limitless costs of entitlement programs, plus billions squandered for an unnecessary war.
And with all this financial disaster around us, most of the presidential candidates, (in what's left of both political parties), are engaged in a frantic bidding war to buy votes. They're buying and selling with unrealistic promises of more billions in unfunded tax cuts and gigantic new spending programs.
Talk about the need for hope? The need for change? Brother, can you spare a trillion?
And here comes the supreme irony...
The major credit rating agency, Moody's, just told the world that the U.S. is at risk of losing its top-notch, triple-A credit rating. Moody's will demote the U.S. within 10 years unless the government takes radical action to curb soaring healthcare and social security spending.
The Financial Times reports: "The warning over the future of the triple-A rating - granted to U.S. government debt since it was first assessed in 1917 - reflects growing concerns over the country's ability to retain its financial and economic supremacy."
Should we be upset by this dire warning from the venerable old Moody's?
Well, it was Moody's Investors Service, Standard & Poor's and Fitch Ratings that played a leading role in creating and sustaining the false boom in U.S. sub-prime mortgages.
"From 2004 to 2006, these Big Three rating agencies doled out investment-grade ratings on nearly US$1 trillion worth of mortgage-backed securities." And then most of that dubious paper turned into junk - a big factor in the pending recession.
Once again, Moody's is wrong. Moody's says the U.S. has 10 years before economic logic will downgrade the American government as a bad investment. Ten years indeed - we'll be lucky if we have ten months before the inevitable crash...
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