So if you borrow so much money that people start to think that you can’t pay it back then your credit rating goes down? You don’t say. Full story here from the Financial Times.

Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.

That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.

Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.

Wow – who could have EVER guessed that creating a $1.8 TRILLION dollar deficit might cause a loss of our AAA credit rating? I mean with the Obama White House filled to the brim with college professors and lawyers I’m sure that they thought this out already. You know – all of that smart power. Of course you would have to believe in capitalism and free markets to pick up on that potential credit rating problem.

Question – If China refuses to lend us money because they think we are a credit risk will it be considered “Red Lining”? Not to worry. If that’s the case they will be sued by Obama and protested by ACORN. Maybe Barney Frank and Chris Dodd can drive up to the United Nations and demand that they write some laws that force China to lend us money.