Did u eat all of the pudding?
For US Economy, Short-Term Good News is Bad News
It is now conventional wisdom that the U.S. faces an acute fiscal calamity. America's problems are severe: a deficit that is more than 10% of GDP and total debt that is more than 70% of GDP. But all evidence suggests that the U.S. does not face an immediate crisis. Take a look at the simplest indicator: the day that Standard & Poor's raised its now famous warnings, the markets decided to lower America's borrowing costs, and the dollar rose against its principal alternative, the euro. In fact, the real problem for America may well be that it does not face a short-term crisis.
Around the world, people, countries and companies are looking for safe, liquid investments. And the market's judgment is that the safest such investment is Uncle Sam's debt. We all know the medium- and long-term problem with U.S. debt. It's been discussed worldwide over the past few years. And yet during that period, America's borrowing costs have fallen. Markets are still willing to lend Washington more money at astonishingly low rates. The cost of servicing America's debt today is actually lower than it was in 1998, at the height of the Clinton boom. Why? Even though the U.S.'s debt now is much greater, interest rates are much lower, and the result is a lower bill.
Read more: http://www.time.com/time/business/ar...#ixzz1KHICMyY8