We wouldn’t go so far as to say the US government is the worst credit risk on the planet. The world is a big place and there are a lot of truly screwy things going on hither and yon. But if you do stop and think for a moment – step back and look at the thing from a banker’s perspective – what do the numbers say?
Most of us human beings have our creditworthiness determined by our personal balance sheet, how much is in the plus column and how much in the minus. Add up the assets and subtract the liabilities.
When you apply this same logic to the US government, it’s hard not to either laugh or run shrieking from the room. Even before this latest round of bailouts by the Obama administration, the federal balance sheet had a VERY large minus sign in front of it. It’s been that way for years, through Republican and Democrat reigns. It’s the biggest sea of red ink in the world! They could sell off everything but Rhode Island and still not break even.
Okay, bad balance sheet. What about cash flow? This year the fed will take in about $1.9 trillion in taxes and spend about$3.6 trillion. Living beyond their means? This is living beyond any semblance of reasonable behavior in the galaxy. What kind of real world banker would lend money to an applicant like this? It would take the serious, serious death of most brain cells.
Ladies and gentlemen, welcome to your government.
