Yet another major Wall Street analyst [3] is predicting that the US government will lose the AAA rating on its bonds in the near future.
NEW YORK (Reuters) - Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.
Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.
Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell. ...
In the end, this shouldn't surprise anyone. It's really all about simple math. Current debt, plus recent deficits, plus Obama's anticipated deficits equals an unsustainable obligation that will eat up a tremendous portion of our annual GDP, cause massive tax increases, further weaken the economy and, possibly, result in government default at some point to our bond holders.
And if people like us can figure this out, you know that the people (and governments) that usually buy up these bonds know it too. Which means it won't be long before they stop "buying" what our government is selling, which explains why the Chinese laughed at our Treasury Secretary [4]recently when he assured them we were getting our fiscal house in order. It's a joke. Any everyone knows it.
