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Microsoft and Johnson & Johnson Are Safer Than The US Treasury
On Friday, Moody’s capitulated. They finally downgraded the US’s credit rating from Aaa to Aa1. In this downgrade, they joined Fitch and Standard & Poor’s, which each downgraded the US years ago. That leaves two U.S. institutions with an Aaa credit rating… Microsoft and Johnson & Johnson. Which is to say that it’s safer to lend money to them than to the US. Why the downgrade? Debt, pure and simple. That and our continued inability to do anything about it. Politicians of all stripes are addicted to spending and otherwise using the Treasury to bribe their voters. Even today, the “big beautiful bill” is chock-a-block with giveaways that take effect immediately and “cuts” that start conveniently after the 2028 election… i.e., never. There is nothing now but time between us and a ruinous financial disaster.
Published in General
Financial disasters come and go. The Soviet Union had a financial disaster. The earth is still turning on its axis. People are still enjoying themselves and making babies. It wasn’t the end of the world.
“It’s the end of the world as we know it. (And I feel fine.) – REM
Let’s see …in the Russian financial crisis of 1998 Russian inflation hit 84%. Banks failed. People lost their savings. It brought us Putin eventually. It wasn’t worse because Russia is a net exporter and the cratering ruble helped their exports.
Trump Derangment Syndrome is preventing the spenders from seeing what a gift DOGE is. If Elon were allowed to find that bogus trillion and thus preserve the health of all the programs that matter to voters (unlike insider grift like USAID), that would prevent that big clownshow on the hill from having to make significant cuts sooner and may even help to foster enough economic growth to increase revenues without new taxes and at least stop the bleeding.
Attacking Musk rather than let Trump do anything positive is malignant insanity.
True. So is spending more money we don’t have.
Verily.
Personally, I think it’s impossible to control spending until they get serious about wiping out inflation and get serious about the only utility of government which is producing public goods. You never hear those guys taking either one of those topics seriously especially the latter one. The other thing is, they should have put a gun to everybody’s head about Social Security and Medicare the second the Soviet Union fell. Medicaid has turned into something that’s really stupid, as well.
Not to worry. Modern Monetary Theory will take care of it.
That’s like saying “earthquakes come and go”, so don’t harden housing or buildings against it, to mitigate its worst effects.
You can step out of the way of the oncoming train or just stand there. When unemployment rates go up, so do suicides, divorce rates, and the rate of magical baby-making goes down. Real-world consequences exist, and you’re casually batting aside the lives of hundreds of millions with a “Nah, it’ll be fine”.
You’d fit right in, in our illustrious Congress.
Fiscal conservatives are unicorn rare. It’s truly amazing that the electorate is continually bamboozled by charlatans who claim to be so with no evidence whatever. It’s become a Lucy/Charlie Brown/Football situation.
You should note that I was careful not to say that “it will be fine” or that we shouldn’t do anything to keep it from happening.
I hate to say it, but despite the bluster and bravado, from a fiscal standpoint, we were better off with Newt and Bubba than with Elon and Trump.
People really suffered and are continuing to suffer in the former Soviet Union. Elderly ladies sold sunflower seeds and shabby household goods spread out on bedsheets on the sidewalks. Prostitution and drug abuse became rampant. People shivered in the darkness in winter because the central heating and electrical stations were shut down due to non-payments. Many literally lived on bread and water. Store shelves sat empty.
There was a civil war in Tajikistan and Moldova and wars between Armenia/Azerbaijan, Russia/Chechnya, Russia/Georgia, and Russian/Ukraine.
I’m not sad to see the Soviet Union enter the dustbin of history, but the collapse inflicted enormous suffering on its people.
Will we face the same privation in a decade?
Russians stopped making babies in the late 1980s as the Soviet Union collapsed. Live births dropped from 2.50 million in 1987 to 1.21 million in 1999. Deaths have been higher than live births every year since 1992 (except for a brief period 2013-2015). In 2024, 600,000 more Russians died than were born. The despair caused by the collapse of the Soviet Union continues to this day.
They didn’t stop. They’re still making babies, but at a lower rate.
It could happen here, too. Yet, the world will keep turning on its axis and people around the world will take miserable pleasure in our misery. It may be the end of us, but it won’t be the end of the world. The USA is not the whole world.
And pocketing millions Themselves via graft.
All of Them.
Except that the collapse of birthrates is a global phenomenon.
Also, the USA is the part of the world where I live, so its fate is of great concern to me.
We were also better off with Newt and Bubba than with Bush and a GOP controlled Senate and Congress. Fiscal conservatives have been politically homeless for quite some time now.
Me, too. But the world keeps turning regardless of the things that are of great concern to me.
That’s when Greenspan started printing money. They had all kinds of capital gains and they got rid of the 30 year treasury bond. It was fake. They have to stop printing money and they have to understand what public goods are.
When I arrived in Ukraine a couple mornings ago, my bike and I got off the bus in dawn’s early light, perhaps due to border control taking a couple hours less than the schedule allowed for. I put my bike together and then rode around to warm up as it was cold. At random I ended up on a street of shops that was old Soviet in a way that I had not expected to see in Europe, even though I’ve watched many videos of what you might call Soviet decadent building porn, and have been around old Soviet buildings in Poland. I wondered if I had made a mistake starting in this city, which I won’t name for now. But the city was just starting to wake up, and I soon saw more modern parts of the city, too. But even from those parts you can see old apartment buildings with rotting balconies or bad window jobs here and there. There are lots of reminders of what people went through both before and after the Soviet Union collapsed, and the streets are full of people old enough to remember it all. It does make me think about what will happen to our own country when it collapses.
In the magical minds of mainstream Progressivist economists, it helps people who are suffering economically to be net exporters of goods and services! Maybe money is a good source of roughage and it fills up your stomach almost as much as the food you are sending to foreigners?
It’s not magic Mark. It’s basic economics. Exports let Russians earn valuable foreign currency with which they could buy stuff that the ruble wouldn’t. If they were net importers the cratering ruble would have crushed them.
The problem with that argument (that they could buy stuff) is that, by definition, “net exporters” are not buying stuff (like food, medicine, clothing, tractors, machine tools, fuel…).
They are selling stuff.
Since private corporations have neither the financial tools of a sovereign nor the power to tax, I find it impossible to accept Microsoft and J&J are a better credit risk than the United States.
Your rating may very well be right, and that of the bond raters may be wrong. (They have been spectacularly wrong in recent memory).
But it is not likely that the reason for the difference of opinion is that you are taking into account the fact that private corporations have neither the financial tools of a sovereign nor the power to tax.
Why?
Because it is likely that the bond raters also knew that about governments, when they did the rating.
But like you I cannot imagine what they are thinking. I guess there could be a series of failed Treasury auctions in the future. But even so, if things got that crazy, would the best quality private securities still be safe? This is above my pay grade.
Perhaps Microsoft and J&J have better ratings because their bonds are partly financed by significant non-US revenue streams.
It seems like the earth’s rotation is the only thing of great concern for you.
Everyone else can jam it and we can spend trillions we don’t have, annually, and so what if lives are destroyed or lost? What’s that in the great scheme of world turnings?
It’s these in-depths analyses, and more, that you can receive in places where they think of humans as indistinguishable automatons who are of no great concern.
Lordy Mark. Facts matter. It’s Russia. Any it’s NET exports. They needed to BUY that stuff you’re talking about. They sell oil and raw materials.
You might want to re-read the sentence of mine just above your yours, and then edit your above sentence for accuracy. That way I won’t feel so bad about people understanding me to have written the exact opposite of what I wrote.