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Is the US next? Now that would be a wake up call

http://www.reuters.com/article/topNews/idUSTRE54K2A320090521...

jack
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No. of Recommendations: 0
Is the US next? Now that would be a wake up call

http://www.reuters.com/article/topNews/idUKTRE54K2OG20090521...

"The chance of a U.S. Treasury default is zero, so from that standpoint, talk of the U.S. losing its AAA is being overplayed," said Peter Hooper, chief economist at Deutsche Bank in New York.

"Yes, there are risks, certainly interest rate and inflation risks, around what is happening, but default risk is very, very low,"


The gist of the article points out that rather than default the Fed can just print more money. What happens when the $US becomes worthless?

OxBeaux
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Ox,

I think just putting these G20 standouts on notice for their debt habits should be a wake up a call. I also disagree with Mr. Hooper, I think it is both possible and plausible for some of the g20 including the US to lose their AAA ratings for exactly the reason you state. At what point do we make the USD so diluted that it has a significant impact.

We may not lose our AAA rating directly, it is possible at some point the international market will price US debt as less than AAA which is functionally the same. I wonder if the FDIC and the Fed Bank have the political and fiscal fortitude to reign in this liquidity as money comes of the shelf. Their is an addiction to growth at all costs that has infected Wall St. for decades and has spilled over into the beltway. The handwriting is on the wall, how many growth at any cost companies have blown up? WorldCom, Tyco, Enron . . .

jack
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