US Treasury secretary Tim Geithner has assured the economic world that the US will never lose it’s AAA Debt Rating. When assurances of this strength are given it raises one question – When are they going to lose their rating?
The news story by Rebecca Christie appears here on Bloomberg.
Some choice quotes:
On whether a downgrade is a concern (after this comment by Moody’s Investor Service):
“That will never happen to this country.”
Government track records are not crash hot on “never”.
When will the predicted USD$1.6 trillion deficit be reigned in?
“The U.S. plans to rein in the deficit once the labor market recovers”
One day, definitely, maybe, providing that …
When will homeowners get promised reworked loans?
“Treasury chief responded that the administration is ‘absolutely committed’ to following through on its promises.”
A government promise? I’m not holding my breath.
Would tighter financial regulations put U.S. banks at a disadvantage?
“I’m very confident we can make sure that we are working very closely to raise global standards around the world so we have a level playing field”
Read – we’re going to use our economic muscle to make sure that everyone else has the same crippling, over-the-top controls on their financial institutions.
If (and it’s not a large if) the downgrade happens it will not happen straightaway as there are enormous forces at play. Unfortunately the red flag is raised for me when I hear politicians state categorically that nothing is going to happen.