“The Odds on the Dollar, Treasury Bonds and the U.S. Government’s AAA Grade All Heading for the Dumpster are Shortening”

“The Odds on the Dollar, Treasury Bonds and the U.S. Government’s AAA Grade All Heading for the Dumpster are Shortening”:
"Washington’s Blog
Friday, May 22, 2009

I’ve written numerous essays on the facts that the dollar is losing its status as world reserve currency, the bubble in treasury bonds may be ending, and the U.S. may very well lose its AAA sovereign credit status.

Bloomberg writer Mark Gilbert addresses all three facts today:

The odds on the dollar, Treasury bonds and the U.S. government’s AAA grade all heading for the dumpster are shortening.

While currency forecasting is a mug’s game and bond yields can’t quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear what Agent Smith in the “Matrix” movies called “the sound of inevitability.”

Several policy missteps suggest that investors should stop trusting — and lending to — the U.S. government. These include the state’s pressure on Bank of America Corp. to buy Merrill Lynch & Co.; the priority given to Chrysler LLC’s unions over the automaker’s secured creditors; and the freedom that some banks will regain to supersize executive bonuses by giving back part of the government money bolstering their balance sheets…"