WHO DO YOU BELIEVE? MOODY’S OR OBAMA?

An illustration of what President Obama and the Democrat's have to say about the economy
An illustration of what President Obama and the Democrats have to say about the economy

The Foundry, the blog at The Heritage Foundation has this to report: Moody’s on Debt Limit: Calling Obama’s Bluff on Default. Here is how that post starts.

A voice of reason emerged today among the doomsday predictions over a U.S. government default if the debt limit is not raised by mid-October. The Washington Post reports that Moody’s, a top credit rating service, suggested that hitting the debt limit does not mean the U.S. would default:

“We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.”

The weird thing about this whole brouhaha over the debt limit is that our national debt ceiling is like a credit card limit. You got a credit card? What happens when you reach your limit? You stop borrowing  right? When is that a crisis? When you are out of work, right? Is our government out of work? Not really. We are still paying taxes. Government shut down or not, we still pay and pay and pay and pay………………

Stop and think. What would be more troublesome? Do you have a friend who doesn’t know when to stop spending? What do think would happen if that friend had a credit card with an infinite card limit? And how else would we describe what Obama and the Democrats want?

Give The Folks At Moody’s Credit For Courage

Note that the when Moody’s published this observation it went out on a limb. Theirs is a heavily regulated industry. Undoubtedly, some in the Obama administration are already devising way to punish Moody’s.

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10 thoughts on “WHO DO YOU BELIEVE? MOODY’S OR OBAMA?

  1. scout

    Ignorance is bliss. But you might want to examine the issue further. If the United States were Liechtenstein or Andorra, your analysis might have a bit more validity. Alas, however, U.S. Treasuries have a role in the world financial system that overarches their domestic debt instrument function. Just the anticipation that there might be a default, coupled with the previous downgrading, has already cost us billions.

    Fiscally responsible conservatives (there are a few of us left) know bloody well that the debt ceiling must be raised and that there must be no doubt that we will do so in a timely manner.

    All this relates back to another theme that plays here on occasion – the quality of education in America. Whether it is the fault of the public school system or private schooling or university curricula, I cannot say with certainty. But it is apparent that a vast swath of the citizenry, including elected representatives, have very little understanding of either national or international finance. Their cluelessness could end up collapsing the economy.

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    1. It’s all so complicated. I guess only the big minds like your own can grasp the intricate concepts. Could you bother yourself by trying to explain it to us poorly educated ninnies? It just is does not hack it. Perhaps you could define “is.”

      Has it occurred to you that if our financial system is so fragile, it is going down anyway? Look at the people we have running the show. Their idea of fixing any problem is more government control. If they are in charge, they are happy. Free enterprise doesn’t work that way, but these busybodies seek to enslave us. So what matters to them is who they can blame, not making the economy work.

      So what’s your solution? We implement Obamacare, foul up a seventh of the economy, raise taxes, and further increase spending. That will fix the economy.

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  2. scout

    Your last comment suggests that poor financial policy is acceptable because the system will fail anyway. I don’t accept that.

    I had pretty durn good professors in international economics. Most are retired or have passed on. Nonetheless, if you’re interested in these topics, there are a number of area schools where you could probably sign up to take some courses. George Mason has come up particularly fast in a relatively short time in its economics department. It is absolutely top flight. It’s a great local resource.

    Obamacare is not a major adjustment of the pre-existing system. I have no idea at this point as to whether it will, on balance, have net positive or net negative effects. I think it will have to work through over a period of at least five years before one can make any accurate evaluations. I have my doubts that it will successfully address the problems of the pre-esixting system, but we’ll see. I don’t find it to be constitutionally alarming or likely to have major negative near term effects on the national economy. But my mind is not set on these impressions. We will see. I do think that the health care insurance policies of the federal government will change constantly over time, so the term “Obamacare” really describes a moving target that will not be the same this year as next.

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    1. Obamacare is not a major adjustment of the pre-existing system.

      🙄
      If we want our government telling us we have to buy this, that, and whatever, I suppose there is nothing to it. It’s just CHANGE YOU CAN BELIEVE IN! If you don’t mind wrecking the economy for the sake of a cradle to grave Utopian scam, Obamacare is just a mirage that will fade quietly away as if it never was.

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  3. scout

    You don’t have to buy health care any more than you have to buy car insurance. However, if you choose to “go naked” (a reckless choice that inflicts harm on others when you have a catastrophic accident or illness that you can’t pay for), you pay a modest tax penalty to offset the costs and risks you are imposing on the rest of us.

    How do you know that preserving private insurance as our vehicle for dealing with health care costs will “wreck the economy”? It seems like far less an imposition on the economy than a number of alternative approaches. The economy already was taking hits from the large number of uninsured citizens under the previous system, not to mention the high costs of services and the middling health care quality results.

    You know, ultimately, some, perhaps even many, of the concerns about the efficacy of Obamacare may prove valid. We have to hope the our leaders are capable enough to adapt the program to address identified flaws. But, at this stage, all these cataclysmic hissy fits are political marketing memes intended to frighten impressionable people.

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    1. Obamacare is just like buying auto insurance. Yep! For the privilege of breathing, government has the right to make us do whatever it wants — for our own good, of course. Gosh! Why are so many Americans irate about nothing?

      Do you understand the term “busybody?” How about I take your paycheck and spend it for you — for your own good, of course?

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