18 July 2011

Moody's calls for US to refinance debt on zero-down, subprime, no-documentation loans!

I laughed so hard I cried when I read this article...

Budget: Moody's Suggests US Eliminates Debt Ceiling - CNBC:

"Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders."

Because, frankly, there'd be a lot less uncertainty about the government's solvency if it could borrow limitless amounts of money.

Go try to explain that to your mortgage broker next time you buy a house.

"Listen, you'll have a lot less uncertainty about whether I'll make my payments if you stop trying to put a limit on how big a loan you'll approve. I mean, come on, man! Don't tie my hands!"

Oh, I know - I'm oversimplifying. Moody's explains further:
"In the United States, Moody's said the debt limit had not effectively curbed the rise in government debt because lawmakers regularly raise it and because that limit is not related to the level of expenditures approved by Congress."
There, you see? It make much more sense now. The debt limit doesn't really restrain debt because it always just gets raised anyway. Therefore, instead of refusing to keep raising it, we should just not have a limit at all.

I think I tried that argument with my parents when discussing curfew back in high school.

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