The U.S. can never become insolvent!

More unbridled stupidity from the rating agencies

So Moody's comes out and says this today...

"...the U.S. could lose its triple-A debt rating if next year's budget negotiations do not produce a downward trend in the country's debt-to-gross-domestic-product ratio."

Yet the St. Louis Fed says this:

“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational. Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets

And S&P downgraded the U.S. credit rating last year and bond yields plunged to record lows.

Wouldn't you think that would cause Moody's and the other credit rating agencies to rethink their rationale?

No.

That's because they don't give a shit. They are arrogant; fixated on their view of the world, and consider themselves smarter and better than everyone else. I knwow, I worked at a rating agency (S&P).

Their attitude is, they don't have to read no stinkin' commentary from the St. Louis Fed. They don't have to acknowledge their deep misunderstandings about currency issuers and non-currency issuers. They don't have to admit that they got the whole, entire, subprime fiasco horribly wrong.

They're Moody's. They're S&P. They're Fitch. They can say whatever they want.

Hey Rick, if you had $1 million in Treasuries...

CNBC reporter Rick Santelli just went on another one of his monumental rants, which I am sure will go viral on Youtube. He said that if the government took $1 million from all 225,000 million-dollar earners in the U.S. (in other words, took all their income), then the deficit would only be reduced by $225 billion.

Santelli says the problem is spending, but in reality, the problem is his understanding...period.

That's because you can play the same numbers game on the spending side. If the government cut spending by $225 billion (as opposed to taxing those millionaires), then you removed $225 billion in incomme from some group of Americans in the private sector. Same thing as that tax he hates so much, only it probably hits different people, like the very blue collar workers that Santelli purports to stand up for.

Santelli believes the debt is catastrophic to his kids. Well, he's the bond expert, right? I wonder if he would feel poor if he had $1 million in Treasuries? If his accountant prepared his financial statements wouldn't he list those $1 million of bonds as an asset? Of course he would.

I'd love to see his response to that question. His debt rant was an embarrassment.