Moody’s Mulls Downgrading U.S. Debt
The U.S. isn’t Greece. Yet.
Moody’s is no longer so sure about the quality of Uncle Sam’s debt. Reports the Christian Science Monitor:
The US needs to make significant government spending cuts or else risk losing its gold-plated credit rating that has made extensive borrowing so affordable, Moody’s Investor Service said late Monday.
The announcement was a sobering warning that the country’s burgeoning debt has weakened the country’s economic standing, and that US Treasury Bonds, traditionally a bullet-proof investment, could lose their sterling Aaa-rating if Washington cannot control its federal debt.
If Moody’s were to downgrade the country’s rating, the impact could be severe. It would signal to lenders worldwide that the US is no longer one of the safest places to invest money.
That, in turn, would threaten the country’s ability to borrow freely and extensively from other countries on favorable terms. Investors would likely demand a higher interest rate to finance US debt, which would push federal debt higher still.
“There’s a profound effect in this announcement,” says Max Fraad Wolff, a professor of economics at New School University in New York. “The US has always been the gold standard … and this begins to signal a fall or weakness in US global economic position. That’s a bit like a sea change.”
Obviously we are long overdue for some fiscal responsibility in Washington. And that means cutting spending across the board. Lawmakers might start by considering what programs are authorized by the Constitution–and the far larger number which represent unconstitutional political power grabs.
Yet Another Imperial Outpost in Pakistan
Visit an American embassy almost anywhere in the world and it is likely to be a large, hulking, ugly fortress. Both size and security are dictated by the U.S. government’s seeming attempt to be dictatress of the world. Following the biblical principle that God is aware whenever a sparrow falls to earth, Washington wants to be consulted whenever a country adjusts a local education ordinance.
Very often the U.S. government keeps busy propping up unpopular regimes and intervening in internal political disputes. As a result, Americans are targeted by demonstrators and terrorists alike. Our embassies need to be large to accommodate all of the officials who are busy micro-managing the local society and fortified to protect those same officials.
The result isn’t particularly good for America’s image. And it is expensive.
Consider the taxpayer tab for new and expanded facilities in Pakistan. Reports the Christian Science Monitor:
The US is embarking on a $1 billion crash program to expand its diplomatic presence in Pakistan and neighboring Afghanistan, another sign that the Obama administration is making a costly, long-term commitment to war-torn South Asia, US officials said Wednesday.
The White House has asked Congress for – and seems likely to receive – $736 million to build a new US embassy in Islamabad, along with permanent housing for US government civilians and new office space in the Pakistani capital.
The scale of the projects rivals the giant US Embassy in Baghdad, which was completed last year after construction delays at a cost of $740 million.
Senior State Department officials said the expanded diplomatic presence is needed to replace overcrowded, dilapidated and unsafe facilities and to support a “surge” of civilian officials into Afghanistan and Pakistan ordered by President Barack Obama and Secretary of State Hillary Rodham Clinton.
Other major projects are planned for Kabul, Afghanistan; and for the Pakistani cities of Lahore and Peshawar. In Peshawar, the US government is negotiating the purchase of a five-star hotel that would house a new US consulate.
U.S. policy towards Pakistan has been roughly 60 years of incompetence, mistakes, bad judgment, ignorance, inadequate moral conscience, wasted aid, counterproductive actions, and utter failure. But Washington continues to try to fix Pakistan. It seems like time for U.S. officials to learn from their experience.
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