Regarding your editorial "The Road to a Downgrade" (July 28): Anyone who has actual experience with bond investing and trading has already discounted the downgrade Standard & Poor's and Moody's have threatened, and now they're quietly worried about the next two downgrades.
No significant spending cuts occur until 2014, and there are no reductions in entitlements. Assuming a $2.5 trillion increase in the debt ceiling, the U.S. national debt will be $17 trillion by September 2012 or early 2013. Debt service will rise about 15% and 50 cents of every dollar we spend will be borrowed by 2013. Corporate and municipal bonds will also suffer a drop in prices. The negative affect is a higher hurdle to profitability for businesses, increasing the likelihood of job layoffs. This vicious circle will reduce tax revenues, raise the unemployment rate and the debt and deficit.
It is becoming more obvious that the president and his advisers do not have any practical experience with debt instruments as well as disdain and no practical experience with business.
While everyone in the U.S. is praying for the language of economic balance rather than election rhetoric, it would be wise to also pray the U.S. does not suffer a Japan-like natural disaster.
Sam Lieberman
Minneapolis
