Greetings, loyal minions. Your Maximum Leader is sure that yesterday you were sitting around saying to yourself, “Self, I wonder if the Washington Nationals will be able to snap their 7 game losing streak tonight against the Pirates?” Well… If you weren’t saying that to yourself it is likely that your thoughts were cluttered with other mental ephemera. So, while you were cluttered it is possible that you missed this little tidbit. Standard & Poor downgraded Britain.

Okay. Standard & Poor didn’t actually downgrade Britain from First World to Third World or anything. In fact S&P didn’t actually downgrade Britain’s AAA bond rating… Yet. According to the piece:

In cutting its outlook for Britain’s sovereign rating from stable to negative for the first time, Standard & Poor’s cited debt levels approaching the size of the nation’s gross domestic product. While S&P reaffirmed Britain’s actual long-term credit rating at AAA, its statement was effectively a warning about massive government spending.

…

A sovereign rating downgrade can undermine investor confidence at a time when many governments need investors to buy their debt. That could make it more costly to finance bank bailouts or stimulus spending.

The lowering of the outlook for Britain serves as a cautionary note for the United States, analysts said, because the federal government is also running record deficits as it tries to revive the economy.

On NPR’s Marketplace yesterday they ran a short piece on this subject and hit a few interesting points that ought to be noted here. One of the reasons for the warning (and potential downgrade) was that British government debt will soon reach 100% of GDP. If you’ve been looking at some of these fun charts that show the massive deficits projected under the Obama Administration you will realize that US debt could soon reach the 100% of GDP level…

So lets review some facts… A few months ago the Chinese (a major US creditor) openly mused about the future credit worthiness of the the US. Britain’s been warned that continued public sector spending without restraint will cause their bond rating to fall and make it harder to borrow (and thus spend). The Obama Administration has outlined spending over the next 10 years that is unprecedented in recent history (WWII might have had similar spending levels). US spending is financed in large part by borrowing…

Do you see a trend here? It isn’t just that we are saddling our progeny with massive debts; it is that we are running through our credit lines with no sign of stopping and eventually that credit will dry up or become too expensive to maintain. When that happens will our whole nation be like California? Or like Zimbabwe?

Carry on.