Standard & Poor’s Places U.S. Debt On Negative Long-Term Outlook While Moody's Maintains Top U.S. Sovereign Rating, Positive Outlook

Rick Calhoun

Rick Calhoun, Crews and Associates:: If this [action by Standard & Poor] isn’t a wake-up call for Congress, nothing is. It’s time to rein in federal spending and balance the budget. Instead of pointing fingers, congress must take action now. We can argue about entitlements until the cows come home, but nothing will solve the problem until we reform entitlements and reassess all federal spending. If we want to protect Social Security – fix it! If we want to protect Medicare and Medicade – fix it! If not, both programs will go away. Partisan bickering aside, if we don’t fix our problems, the markets will do it for us. It will be painful either way, but far less painful if we do it on our own.

Remember, Greece was placed on Negative credit watch by Standard & Poor’s on December 7, 2009 – only sixteen months ago.

* On another note, consider how many AAA sovereigns are out there...what follows is a list. Note the U.S. is at the bottom due to alphabetical listing and not because of credit quality. Also note, that U.S. GDP is $14.6 trillion which is exactly equal to the sum of all the other countries GDPs combined. So while the downgrade threat is what it is, buyers shying away from U.S. debt have little other choice. Therefore, the United States financial leadership will make or break global economics in the future.
GDP trillions

Australia Austria Canada Denmark Finland France Germany Guernsey Hong Kong Isle of Man Liechtenstein Luxembourg Netherlands New Zealand Norway Singapore Sweden Switzerland United Kingdom United States

AAA/Stable/A-1+    1.235 AAA/Stable/A-1+    0.366 AAA/Stable/A-1+    1.564 AAA/Stable/A-1+    0.306 AAA/Stable/A-1+    0.232 AAA/Stable/A-1+    2.555 AAA/Stable/A-1+    3.306 AAA/Stable/A-1+    0.003 AAA/Stable/A-1+    0.226 AAA/Stable/A-1+    0.003 AAA/Stable/A-1+    0.005 AAA/Stable/A-1+    0.052 AAA/Stable/A-1+    0.770 AAA/Stable/A-1+    0.138 AAA/Stable/A-1+    0.413 AAA/Stable/A-1+    0.217 AAA/Stable/A-1+    0.444 AAA/Stable/A-1+    0.522 AAA/Stable/A-1+    2.250 AAA/Stable/A-1+  14.600

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Rick Calhoun is First Vice President, Crews & Associates, Inc., Little Rock, AR

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