From the wire:
*MOODY’S SEES CUTTING U.S. WITHOUT DEAL TO LOWER DEBT/GDP RATIO
Parse that and think about it.
It means that unless there is a deal that stops adding debt faster than GDP advances Moody’s will cut the US credit rating.
That’s public (not including Social Security and Medicare) debt-to-GDP by the federal government.
Before you cheer over the 1993-0200 time frame as a potential model note what happened to total debt-to-GDP during that period.
We’re using the Federal Government’s borrowing to cover for the fact that the private economy hit the debt-acceptance wall in 2007.
That’s why it’s happening — the government is desperately trying to evade recognition of the serial bubble blowing of the last 30 years and the economic consequences that must follow from what we have done.
And now Moody’s joins S&P in telling the government: Cut it out or face the consequences.
This is not priced in.