USA opinion on our Government. Says it all.

[Dirko]

I don't understand how they can be so far in debt yet still maintain the AAA rating?

It helps when the global financial markets are based on your currency ... you literally can just print more money.

They're gonna be screwed if China gets in on the act.

[Q.]

US bond yield is at a record low so there is plenty of money to borrow. WHat we're seeing is political grandstanding, with the opposition ensuring that the incumbency is forced to cut spending and thus weaken their ability to make necessary reform that could help them win the next election.

If anything, the AAA rating should be taken away because of the political games being played with the US economy.

[Psyber]

US bond yield is at a record low so there is plenty of money to borrow. WHat we're seeing is political grandstanding, with the opposition ensuring that the incumbency is forced to cut spending and thus weaken their ability to make necessary reform that could help them win the next election.

If anything, the AAA rating should be taken away because of the political games being played with the US economy.

It looks to me like what the US needs is to prune spending a little, and up taxation a little at the top end, and move towards a balanced budget.
However, I think both parties are so stuck in their dogma that the US will just keep on doing the same things it always does until China forecloses..

[Q.]

IIRC they will cut spending by 2% GDP.

[redandblack]

The Tea Party won't allow the 'temporary' tax cuts for the wealthy to be rescinded.

[Psyber]

The Tea Party won't allow the 'temporary' tax cuts for the wealthy to be rescinded.

Yes, I think it is likely that the recent temporary "solution" will be repeated at the next due date, and that the US will not learn, quickly, that a country cannot just go on piling up debt any more than a family can.

The "developed" world is going to have to learn to live within its budget and not keep borrowing in hope that an expanding population and expanding economy will solve it all later.
We should be preparing for a significant world recession when the US and the PIIGS run into the brick wall soon.
Oz is well placed to survive this slump, given our minimal debt compared to the rest of our peers, and our mining boom, but we need to balance our books too.
We can't rely on "our debt is the lowest in the developed world" as an excuse to be careless.

The world also has to face the music on world population levels - the most important factor in pollution and our CO2 emissions.
[And also a driving factor in our refugee problems.]