ROME: Today Spain was added to the list of countries with severe debt problems. Standard and Poor’s cut Spain’s rating down from AA+ to AA. This step came just one day after S&P downgraded Greek debt to junk status, and Portugal was downgraded two levels. Today’s action spooked Italy’s investors enough to prompt a selloff in Italian government bonds.
European countries are faced with massive debts due to overspending on government entitlement programs and the result is general economic destabilization. Greece’s economic problems are spilling into the streets as a general default looms. Last week’s talks of EU and IMF bailouts have been met with resistance, and the result is an 80% chance of a Greek default this week. If so, French and German banks could suffer massive losses.
The NIP has warned repeatedly that overspending on government entitlements lead to unsustainable debt loads. The inevitable downgrades of the credit of sovereign states lead to civil instability. The US is not immune. Moody’s three warnings to the US signal a possible beginning of the end to US dollar strength and economic stability.
It’s time to throw out the politicians who buy votes with other people’s money. They are spending our countries into oblivion. Instead of putting their citizens to work, politicians all over the world support the unemployed with massive subsidies. Politicians care only for votes, not for the welfare of the countries they serve.