Amidst all the debt ceiling, balanced budget, cut spending, increase revenue (when did raising taxes inherit the moniker “revenue”?), partisan backbiting and other wearisome matters I thought I might focus on some facts.
There are 17 countries that S&P and Moody’s (the same folks who blessed Fannie & Freddie) have bestowed their highest AAA rating.
With all the talk of S&P and/or Moody’s downgrading our debt — surely not a good thing — the inability of our elected leaders to reach a consensus has already increased our debt service.
Investors discern the risk associated with a country’s debt, by looking at the cost to insure against a possible default through a financial instrument called credit default swaps. That cost is increasing back to 2009 levels for the US as we speak.
If we look to 5-year credit default swaps as the barometer, US debt has slipped from our once preeminent position to 10th. The “safest” Country debt on a 5-year credit default swap basis:
- The Netherlands
- United States
If our elected “leaders” don’t reach an agreement to raise the debt ceiling AND lower the deficit , we’ll join the next tier, AA, with, among others, China, Spain, Japan and Saudi Arabia.
We need competent, consensus building, LEADERSHIP that produces results in Washington to rebuild crucial “confidence” not ridiculous, ineffective, partisan infighting that has become almost as abhorrent and tiresome as the party I’m less aligned.