Treasury secretary Tim Geithner, who arguably belongs in prison for his role in the AIG bailout coverup, is back in the news again.
Please consider Geithner Says U.S. Will ‘Never’ Lose Aaa Debt Rating.
Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.
“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”
Geithner said investors around the world turn to U.S. Treasury securities and dollar-denominated assets whenever they are worried about global stability. That reflects “basic confidence” in the U.S. and its ability to bounce back from the global recession, he said.
Moody’s Investors Service Inc. last week said the U.S. government’s bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade.
The U.S. plans to rein in the deficit once the labor market recovers, Geithner said.
Famous Last Words
Notice Geithner's condition to rein in the deficit "once the labor market recovers". The problem is meeting that clause. A labor market recovery might be a decade away or more depending on the meaning of "recovery".
In response to Geithner's pomp ...
My friend "HB" says "File under famous last words".
My friend "BC" says "Geithner serves stateless elites who can say this with full confidence that their wealth and privilege will remain intact no matter what happens to the real US or global economy and sovereign debt situation in the US and the world. The key for those of us not secure within the rentier Power Elite caste is to continue to make arrangements for escape plans to try to mitigate the worse effects of sovereign defaults, currency devaluations, capital controls, confiscation, etc."
Meaning Of Never
I want to focus on the meaning of "never". Is this the start of one of those what's the meaning of 'is' kind of discussions we had with Clinton? I hope not.
Please note Moody's rare display of courage to downgrade Enron from investment grade to junk on November 8, 2001.
On December 2, 2001 Enron filed bankruptcy.
Notice how Moody's displayed remarkable courage and foresight with a timely downgrade of Enron from investment status to junk a full 3 weeks before Enron was delisted. Indeed the chart shows how much on the ball Moody's was (and still is).
Game Is Rigged
Bear in mind that the big three rating agencies (Moody's (NYSE:MCO), Fitch, and the S&P (MHP)) have government sponsorship, thus the game is rigged. Please see Time To Break Up The Credit Rating Cartel for details.
As long as the game is rigged (and it is very rigged), US debt will continue to be AAA rated until even pathetic Moody's cannot take it anymore, or governments sponsorship of the big three ends.