So Spain got cut to BBB- today by S&P, with a negative outlook.
The two-notch slash job took the nation's debt rating to the edge of "junk" status. In truth the entire EU zone except, perhaps Germany, should be rated "F," but we'll leave that aside for now.
The problem there is the same as the problem here -- there is no political will to do what has to be done, which is to cut off the deficit spending.
Right here, right now, all at once.
Yes, I know that's difficult politically. That doesn't change the necessity of doing it.
There is one simple fact about holes, fiscal or otherwise -- you must stop digging when you're in one.
There is a second reality about geometric series, of which any compounded growth rate is -- there is never a better time than now to stop adding to them; indeed, the amount of pain you must accept goes up inexorably each and every day until you cease and desist.
There is no way around this. It is a function of arithmetic, not politics. It is true there in Spain, and it is true here in the United States.
Today's cut was just another notch in the pressure vessel that is already well beyond the point at which it should have burst. We cannot continue to play this game -- not there and not here.
Yet there is no evidence -- anywhere -- that politicians will take the necessary steps and stop deficit spending.
And stop it they must.
I do not know exactly how far we are from the markets giving up on the clown-car brigade and beginning the write down of these debts and forward profit expectations on their own. Taken as a vote of "no confidence" as opposed to one of recognition of reality, there is no floor until confidence is regained, and the more desperate measures that central banks and governments take in response, the worse the confidence deficit will become.
Geithner is playing his wormy self over in Tokyo at the present, but he, like the rest of these clowns, are well beyond their "use by" date and are simply stinking up the kitchen.
We need an honest cook that will stop trying to serve us broiled rat while telling us it's venison.