Breitbart: S&P renews US debt warning
S&P also reiterated that it could downgrade the US debt rating if politicians cannot reach a deal to raise the country's debt ceiling by August 2.
"We believe any additional stresses caused by a protracted standoff in the US would likely amplify already tense market conditions in Europe in light of significant fiscal imbalances in Greece, Portugal, and Ireland," the ratings agency said.
Think about that for a minute. What Standard & Poors is saying is that fiscal restraint increases the risk rating of American securities (and the debt problems in Europe are our fault). We now live in a world where adding more debt reduces our risk of default. Clearly, our financial system is built on a foundation of moral hazard. That seemed to be confirmed in Europe on Thursday, too, where the EU adopted something a lot like our 2008 TARP bill. This tweet from @zerohedge illustrates the degree to which moral hazard rules the day:
France's Sarkozy says if there is any reaction from credit rating agencies, nation states will intervene with guarantees for banks, ECBIf anything's too big to fail, countries should be, but I've long thought that "too big to fail" is two words too long.