Who needs S&P to tell us we are broke and bankrupt?

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There is much debate going on over the US debt  lately and even the rating agencies like S&P get it right. Thanks to last 2 years of spend thrift administration, the  US debt stands at $14 Trillion dollars up from $7.9 Trillion  in 2009. This is alarming to all and to the financial agencies who rate Government issues and financial instruments. Why would it hit you when Standard and Poors tell us that the looming disaster is just around the corner and unless the spend happy democrats and Obama admin are willing to stop this debt binge we can be headed into another major disaster?

Right at this moment there are 3 wars raging and numerous spending plans at work and laid out without adequate revenues, and on top of that a fragile economy is also a drag. S&P said “We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns”.

An actual debt downgrade would increase the cost of borrowing US consumers and corporations. Higher rates would be a blow to the debt laden US financial situation. That is why the stock market dived 200 points on Monday, treasury prices fell sending yields higher.

The markets reaction should not be a warning to us or we need S&P telling us these bad news. Republicans have been harking us for a long time and Budget Committee chairman Paul Ryan has been blaring/proposing this for quiet some time. You don’t need S&P to tell us that Obama administration and Democrats are raising the government spending to 25% of GDP something not seen in the US in last 60 years. Peter Schiff announced on his radio show Monday, “Has S&P really added anything to the debate that wasn’t already widely known?”

We need debt ceilings fixed and not raised and we need Fiscal responsibility reform and not raise the bar. As you should know the biggest threat to US is not Gaddafi’s Libya or North Korea its the national debt.

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