Geitner Says US Credit Rating is safe...

When asked will we ever lose our AAA credit rating?

“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.”"

What did we hear about all the failed banks on Wall Street from Bankers before they all fell apart? "Oh, we will all be ok".... As I see it there are two options, either we default on debt and see our credit rating decline, or we will never lose our credit rating because we will print money and quantitatively ease forever. Those are the only two real options if you accept that the US faces long term declines in tax revenue combined with long term deficit spending. We can only change the outcome if we stop spending. But, if the government stops spending right now with continuing declines in private sector spending, we will see continued decline in our GDP and economy. The only really politically acceptable option is to print money and inflate our way out of debt.

I think the Euro crisis right now is providing Treasury with a chance to issue more debt at low rates as investors flee the sovereign default risks in Europe. This will last until Europe stabilizes, then Treasury will again be faced with problems to find buyers. So, for the time being they can continue pushing the problem to the side.