AAA at Risk? 'Moody's got no clue, US downgrade long overdue'

Run time: 06:17 https://www.youtube.com/watch?v=hLzP86UZwwM   Posted on YouTube: July 14, 2011 By YouTube Member: RussiaToday Views on YouTube: 487   Posted on DU: July 14, 2011 By DU Member: The Northerner Views on DU: 747

 
The same credit rating agency that sparked fresh panic in the EU has now threatened the U.S. Moody's says it's reviewing America's top triple-A debt rating for a downgrade - citing the political bickering that's deadlocked budget negotiations in Washington. And even if the budget is approved - it's unlikely that it'll offer a solution to America's debt - that's according to investor and co-founder of the Quantum Fund, Jim Rogers...

The US is the largest country with big debts. It is also a country with a log of untapped resources including a huge, partly idle labor pool.

The federal and state governments om the US are responsible for their own budgets. The part of the debt that the federal government directly determines is not as high as the debt of a number of smaller European countries with fewer resources.

I posted the following earlier today.

Look at the list of countries and their 2010 debt (at the link).

A lot of the countries with low debt to GDP ratios are either rather undeveloped or big exporters usually of oil or natural resources.

Looking at our national debt, you have to remember that the bonds held by Social Security which are owed to American seniors, are necessarily to be paid out only in small annual amounts. They are intended to be used for the payment of future costs (the baby boomers' retirement)? That is debt that will partly be paid down as Social Security and Medicare tax revenues increase with inflation.

http://en.wikipedia.org/wiki/List_of_sovereign_states_b...

On this chart, the US debt including the debts of the states is 92.7. That is the amount the Republicans are bandying about.

But the debt of the federal government is only 58.9% of GDP. That is the only amount that Obama and Congress can directly determine through their process it would seem to me.

I note that Libya, a big oil exporter with a modest living standard, has virtually no debt.

A lot of the oil-rich countries have little debt. Surprise! Instead of worrying about cutting our budget, we should try to become oil-independent. How about that for a deficit reduction plan?

Russia has little debt. But a lot of Russians live in miserable conditions. They are not so very farm from a Communist society. Hopefully, their demand and productivity will increase, and possibly with it the debt of their government will also increase.

A falling dollar would be great for the US. That would make our exports more competitive and positively affect the problem that is far more important for our economy than the government debt to GDP ratio -- jobs. It's the lack of jobs that keep our GDP from growing to cover our debts.

The debt problem can be seen from two angles: 1) our government debt is too great; 2) our GDP is growing too slowly. People seem to be looking at things from a very cockeyed and rigid perspective.