Investment rating services generally mark down the quality of AAA rated debt once interest payments exceed 10% of revenue.
Well, it turns out that subprime borrowers are not the only ones painting themselves into this well-known corner. Uncle Sam could be in this predicament as soon as the year 2012. That is, in 3 years!
Here's the story: "Uncle Sam Could Risk Triple AAA Status As Early As 2012"
Here's how the vicious cycle works.
You get the idea!
In its 19th century heyday, the US was a net creditor to the world. American savers funded international capital investment around the globe. This continued into the mid-20th century.
Now that situation is exactly reversed. American borrowers are paying ever higher interest payments on trillions of dollars of escalating debt and capital investment is withering.
This is the road to ruin.
Mr Obama. Mr. Bernanke. Don't do it!
Our children and our grandchildren will pay for our mistakes - with devalued (or possibly non-existent) dollars!