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Today's Financial Times front page article that Moody's foresees the USA losing its AAA rating instantly rang alarm bells.  For nearly a hundred years, the US Treasury has been the most creditworthy counterparty in the world, serving as the baseline against which all other credits are rated.  Losing its AAA status as a creditor would undermine all US credit markets, the US dollar as a reserve currency and the global economy more generally as heightened uncertainty shakes up all credit evaluations.

But I'm not really afraid of any of those things, because I think the Moody's report is a Bush administration ploy to attack Medicare and Social Security before Bush leaves office.  About the only way the stock market can be held up from collapse right now is if the massive cash flow from Social Security is diverted into equities and bonds.  They are going to go for it in 2008, and I fear that the corporatist Democrats in Congress will go along.

This Moody's report is just the first boulder from a trebuchet that will keep attacking the edifice of FDR's greatest legacy until a breach permits raping and looting in the Medicare and Social Security strongholds.

Coinciding, as it does, with fears of financial collapse and likely recession, any breach could leave tens of millions more Americans at risk of losing the stake in government that they should cherish most as fundamental to their present security.

From Reuters, as the FT has a subscription wall:

NEW YORK, Jan 10 (Reuters) - Moody's Investors Service said on Thursday the United States' "triple-A" government bond rating could come under pressure in the very long-term if the Medicare and Social Security programs are not reformed.

"These two programs are the largest threats to the long-term financial health of the United States and to the government's Aaa rating," Moody's analyst Steven Hess said in the agency's annual report on the United States.

The report is not a rating action.

Sure the fiscal deficit poses a long term threat to the US financial position, but Bill Clinton proved that this could be reversed.  Just ending the occupations in Afghanistan and Iraq and reforming procurement practices for Defense spending in line with corporate disciplines with fully transparent accounting would make a huge difference to the sustainability of the US federal budget.  As we know from nyceve here at DailyKos, the US could slash the cost of healthcare in half if it adopted European-style programmes for universal healthcare while still delivering higher quality services.  

I don't underestimate the threat of the coming recession to the US economy, but I also know there are better policy responses than looting the legacy built to mitigate the worst impacts of recession for the poorest Americans.

Get ready to defend your birthright that generations of Americans fought for and that FDR secured to the nation.  These bastards are going for the crime of the century, robbing the Social Security trust fund to subsidise bloated Wall Street profits and bonuses.

Northsylvania came up the battle cry for this fight:

Your savings shouldn't have to pay others' gambling debts.

Originally posted to LondonYank on Fri Jan 11, 2008 at 01:44 AM PST.

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