Re: U.S. rating likely to be downgraded again: Merrill

[Guest guest]

The government doesn't care. They are already looking for more ways to print money.

Obama has announced that he is going to work around congress to put in place a plan to help with college loans and some mortgages.

The Fed and Treasury are talking about a new round of mortgage bailouts to help people who's mortgages are under water and buy more Mortgage Backed Securities, you know, the toxic instruments that are largely responsible for us being where we are now?

Lastly, the Treasury is talking about a new series of debt instruments. These would be a variable interest rate treasury bond. They would be released with one interest rate but it would adjust up or down according to overall rates. Funny how the government was not long ago railing at just that kind of mortgage plan but now they want to issue their own junk bonds? All that will happen is that risk loving and big investors will snap them up. The government will get money and think "gee, that was a brilliant idea! Let's print more!!" Investment in other treasuries shrinks and more flow into these. Eventually the interest rate shoots up. Then, everyone starts dumping the old fixed-rate bonds to buy these new one. The bond market goes haywire. Government, enamored with its own infallibility, shifts more printing to junk bonds. Eventually, people start cashing them in and government says "WHAT?! They want to do WHAT?! We don't have that kind of cash!" Then that market folds up, too.

You would think that supposedly rational people would see that they have tried government spending, printing money and bailouts, but none of it has worked. So instead of trying something new, they just go bigger.

But then I'm not really surprised. I went by the book store today and noticed that Mother had on the cover a story about cutting government. They had Uncle Sam being drowned in a bathtub saying "What happens when government is cut so much that it could fit in a bathtub, we're about to find out." That's just the proof that these people don't understand that government money has to come from somewhere and that somewhere is the people's pockets either through taxes, fees, etc. or debt, which is simply a tax on the future, plus interest.

In a message dated 10/24/2011 3:56:15 P.M. Eastern Daylight Time, no_reply writes:

The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.