Rating America's Public Debt

Some readers are doubtless familiar with the organizations that rate the quality or safety of insurance companies and/or bonds.  A few of the most commonly known organizations are Standard and Poor's, A.M. Best and Moody's.

Years ago, when shopping for life insurance, I became aware of yet another organization-- Weiss.  The scuttlebutt was that the other rating organizations were not sufficiently sensitive from the standpoint of detecting financial weakness or a deterioration in safety among those rated.  But Weiss, it was argued, was more sensitive from  this perspective.

Last month, Standard and Poor's lowered its rating of our nation's long-term credit outlook from "stable" to "negative". 

And it turns out that Weiss has gotten in the business of rating the credit of sovereign nations.  It rated the United States a "C", just two levels above junk status.  This ranks us 33rd among 47 nations rated. 

Liberal Democrats at all levels-- national, state and local-- continue to operate under the illusion that money can be spent freely, that economies are not necessary.  They engage in demagoguery and scare tactics to oppose even the most modest attempts at spending reform.  At the federal level, it is over Medicare.  At the state level, it is over public education.  And locally, it has been over items like trash disposal and health department spending and education bond debt.  

Job creation and homebuying continue to be weak.  Gas prices remain high.  Industrial output is variable.  And the inexorable trend toward increasing state control of the economy continues.  We have not even remotely recovered from the deep recession.

And now, the telltale signs are developing that presage the nation's impending debt crisis.  Watch the political behavior of the Democrats in response.

Update: Now, Moody's weighs in.

Comments

[Bubba]

"Watch the political behavior of the Democrats in response."

Watch the response at certain local "progressive" blogs in response, too.

[polifrog]

I appreciate your post, Joe.

One of the dynamics I find interesting is the lack of interest in this matter, well, at least in regard to blogging and the number of comments such posts generate.

Enjoying confrontation I spend an inordinate amount of time over at Cone's. Ed has been good enough to post on this topic in a general sense a few times but the number of comments tend to be low or nonexistent unless Andrew Brod and I get into a discussion.

The point is I sense dismay at the failure of Keynesian solutions. Stimulus has failed and that fact seems to be apparent to all but those who suffer from being wedded to theory.

It would be nice if with three strikes, failure in the Great Depression, failure in Japan's 20 year recession, and now failure during the great recession, Keynesian Theory will be accepted for the failure it is. Unfortunately I doubt it will be, as it provides a seemingly scientific argument for governments to spend -- A political death grip on a theory.

[Harold]

If the US Govt was a private corporation, it would be declared insolvent.

[Bubba]

If the US government was a private corporation, lawsuits over product liability would be too many to list here.

[Ken Hill]

I found this interesting and disturbing.

http://www.youtube.com/embed/VtVbUmcQSuk

[polifrog]

See?

Either people don't care, don't understand, are in denial, feel culpable, feel it is beyond their influence, have no solutions, or... I don't know what, but these sorts of posts generate disturbingly little interest.

[Joe Guarino]

Poli, I think there is a lot of denial, and a lot of apathy. But I also think many people selfishly feel wedded to the programs that have caused this situation-- because of political ideology, or because of self-interest.

Those programs, of course, are Medicare, Social Security and Medicaid.