Heartland friend Alan Caruba is quick to react to the news tonight that S&P has downgraded America’s credit rating for the first time in our history. A quick excerpt of his piece over at The Freedom Pub:
When a nation’s debt equals its entire annual gross domestic product, it is bankrupt. It can still produce goods and services, but it will likely encounter fewer customers worldwide as they too are drawn deeper into their own debt crises.
When it must borrow billions daily just to meet its obligations to other nations and individuals who have purchased its treasury notes, it is has reached a point of “moral hazard” that threatens the wealth of every single citizen.
When it raises its “debt ceiling” to $14.58 trillion, the amount its Congress permits, and one day later its Treasury Department announces that its debt reached 100% of its GDP, it is in serious financial difficulty. Not since 1947 when the U.S. was recovering from the cost of World War II have we reached this point.
The nasty “debate” in Washington over the debt ceiling included the Republican demands that we reduce our spending and Democrat demands that we raise taxes. Those advocating sanity were called “terrorists” and “extremists.” The shallow reductions agreed to were stretched over ten years and barely begin to address the immediate financial crisis. Harder decisions were pushed off on a “super committee” that no one expects to agree on anything.
This news is bad enough for the United States of America, but it affects many other nations around the world in exactly the same way the Crash of 1929 did, leading to the Great Depression of the 1930s and putting in motion the events that led to World War II.
Does history repeat itself? Apparently so.
Read the rest at The Freedom Pub.
