As I’ve been warning for years, America’s irresponsible financial policy will lead to a credit downgrade.
Today, S&P cut its U.S. outlook to negative, warning of a 1 in 3 chance of a credit downgrade in the next couple of years.
As the Wall Street Journal notes:
Standard & Poor’s Ratings Services Inc. cut its outlook on the U.S. to negative, increasing the likelihood of a potential downgrade from its triple-A rating, as the path from large budget deficits and rising government debt remains unclear.
“More than two years after the beginning of the recent crisis, U.S. policy makers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” S&P credit analyst Nikola G. Swann said. He said the rating agency puts the chance of a U.S. downgrade within two years at least one-in-three.
S&P said Monday it sees material risk that policymakers might not agree on how to address budgetary challenges by 2013, which would render the U.S. fiscal profile weaker than that of other triple-A-rated countries.
S&P said that if an agreement isn’t reached and meaningful implementation is not begun by 2013, it would make the U.S. fiscal profile meaningfully weaker than that of other triple-A-rated sovereigns.
While the Democratic and Republican leadership point fingers at the other side, and bicker about ideological pet peeves, this is not a question of left-versus-right.
The war between liberals and conservatives is a false divide-and-conquer dog-and-pony show created by the powers that be to keep the American people divided and distracted. See this, this, this, this, this, this, this, this, this and this.
The real problem is that both Democrats and Republicans want to fund endless wars, give endless bailouts to the too big to fail banks and corporations, and perpetuate the expensive Ponzi scheme of printing money out of thin air.
Imperial wars reduce our national security. Indeed, our top military and intelligence officials say that debt is the main threat to our national security, and have said that the Pentagon must cut spending. See this and this.
To the extent that both the Republican and Democratic parties slavishly follow these meta-policies – which supersede the stated “conservative” and “liberal” goals – they will ensure that we lose our AAA credit, and they will destroy our economy.