Triple-A rating for U.S. in jeopardy
By Darla Mercado
January 11, 2008
The United States could lose its triple-A credit rating within the next ten years unless Medicare and Social Security are reformed, Moody’s said.

Although the country’s level of general government debt is lower than that of other AAA-rated nations, such as Canada, France and Germany, it continues to rise.

A 15.5% rise in Medicare benefits contributed to a 6.5% increase in government spending, and that is expected to continue growing as a part of a long-term trend, a Moody’s report found.

Although during the 2007 fiscal year, the U.S. deficit shrank to $248 billion, or 1.2% of the gross domestic product, due to growth in tax revenues, the Bush administration hasn’t done enough to aggressively trim deficits, the report by the credit ratings, research and risk analysis firm noted.

The problem will leave a huge mess for the new administration to clean up as the 2010 expiration date on tax cuts approaches.

Spending on the wars in Afghanistan and Iraq are also about to become more expensive, with defense costs rising to 10% this year.

In the last fiscal year, this spending made up 4.9% of the GDP.

Moody’s report also saw a growing risk of an outright recession.

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080111/REG/840428110

Been warning about this for a while, but everyone says, oh the economy is doing fine 

Japan is getting crushed with the weak dollar. Their stock market is in full recession mode.

its all b/c we spend crazy money on things we dont need

It's been long in the coming, no real surprise. We're feeling it here in Norway as well, with some of our biggest companies falling from 18% and upwards the last 2-3 months.
And the dollar just refuses to regain worth, that sucks for my friend who works for SDi media translating, since he's being paid in USD... He's loosing 2-3000 NOK every month on that alone!

Japan is getting crushed also by other big other problems..

Everyone loves spending money when it's the government's and not their own...

 People also spend their own like crazy, the average consumer has very little savingings in the US and a lot of debt

That seems really strange from my POV.  Source?

A Google search would turn up tons of sources. Here's an interesting one:

http://www.msnbc.msn.com/id/11098797/

"The Commerce Department reported Monday that the savings rate fell into negative territory at minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing.

...

 With employment growth strong now, analysts said that different factors are at play. Americans feel they can spend more, given that the value of their homes, the biggest asset for most families, has been rising sharply in recent years."

This article is from 2006, reporting on 2005 numbers, so it all predates the current mortgage crisis. 

Here's an even more interesting link with nifty charts and some in-depth analysis:

https://www.phn.com/Default.aspx?tabid=674

There's too much that I'd like to quote, so I'll paraphrase. First, the article talks about how this trend is somewhat deceptive due to increasingly uneven wealth distribution and the spending habits of the very rich. Then it goes on to say this only becomes a big risk if the economy goes into recession or the housing market crashes.

It looks like the waters may only get rougher for the next little while.

I realize i have absolutely no clue what happens if America loses it's AAA credit rating.

Someone wanna fill me in?