It's just more political maneuvering. Don't worry about it.
HAH. S&P isn't a political maneuver, its' the dumb money. The Credit Rating Agencies are the last to know when something is about to go belly up - they rated Enron as solid gold right up until the point where it crashed and told everyone who would listen that mortgage backed securities would never fail - and finally even they are waking up to how screwed we are. The smart money got out of bonds months ago; PIMPCO (the worlds' largest bond fund) dumped every US treasury it owned, following the lead of the hedge funds. Foriegn oil exporting states have stopped buying bonds and started dumping them. We just lost Japan. The only reason that our bond rate is currently as low as it is is becaues the Fed is printing money like a mad man and buying them to depress the price. Once that stops in June (or, potentially if we don't raise the debt ceiling - though there is no reason to suspect that this means we will have to default; that's a political talking point unrelated to reality), then the balloon goes up and we will see what our notes are
really worth.
this is exacerbated by the fact that foreign entities are purchasing overwhelmingly shorter maturities; making us
incredibly vulnerable to a hike spike.
if you're not worried now, then you are either uninformed, not living in the US, or smoking something
good.
The rest of the world is in worse financial condition than we are. We could easily run the National Debt up to 20 trillion or more and still be the safest credit risk.
actually there are multiple entities now that enjoy lower borrowing costs than we do.
Who has better credit than Uncle Sam? If you ask the bond market, that elite list includes Berkshire Hathaway, Procter & Gamble, Lowe’s, Johnson & Johnson, and a host of other blue-chip corporate borrowers. The U.S. government has the ability to levy taxes on the largest national economy in the world, a vast and fearsome revenue-collection apparatus, and more than two centuries of constitutional government under its belt. P&G has Tampax...
Actually the present National Debt percentage of Federal outlay of 11.5 percent is far less than the 20.1 percent Regan ran up in 1988.
except that government spending as a percent of GDP was also much smaller back then, he was facing an entitlement and debt crises, a much larger percentage of the debt was in longer maturities, and so it could be covered.
Without reforms, by 2022, future revenues will only cover Social Security, Medicare, Medicaid, and interest on the debt. That means we will have to give up the FBI, the DOD, the Agricultural Department, the Department of Education... By 2046, revenues won’t even cover interest costs.