Saturday, July 30, 2011

What Really Affects the Credit Ratings

All the hype coming out of President Obama's mouth about credit ratings and debt ceilings is enough to confuse even the most astute Washington watchdog.

Except for the TEA Party.

Several lesser known ratings agencies have already lowered America's AAA to AA+ based not on the current debate. But based on the high dent load.

There's more to credit ratings than paying your bills. Another major factor is the Debt/Income Ratio.

Most Americans can only carry one dollar of debt to every four dollars earned, therefore having a D/I of 1:4. America has 14.3 trillion of debt and only about 3 trillion of income. That puts America at nearly 5:1. To make that easier for liberals to understand, America has 5 trillion is debt and for every 1 trillion of income. Since most liberals don't earn enough to pay taxes, they don't care. And the ones that do, knows all the loopholes and usually reduces their tax burdens to about 1/3 what it should be.

If congress succeeds in raising the current debt ceiling and thereby adding more debt, it stands to reason that more ratings agencies will lower the national credit rating even further causing more widespread panic.

The TEA Party Republicans seem to be the only ones smart enough to understand this and stand solid on their grounds. If only Speaker Boehner could understand this concept.
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