The Government Spending Bubble

Hmm this jump in spending does have the same feel as the housing bubble a few years ago. This article might be spot on.

Think about it. The federal deficit was $1.4 trillion in the fiscal year that ended in September, or 10% of GDP, the largest peacetime deficit on record. But net interest--the cost of servicing the national debt--was only 1.3% of GDP, the lowest in about 40 years. For comparison, net interest was absorbing about 3% of GDP in the 1980s and 1990s.

Your credit card bills aren't so bad when the interest rate is 1.3% but wait until that number doubles or triples. If we can't finance our debt and go bankrupt then it would be a world wide catastrophe. I guess that is why Moody's is slinking around with the debt downgrade stick. They might be able to raise our borrowing costs all by themselves by dropping out AAA rating.