Has The United States Become a “Subprime” Borrower?

Obviously some of the criteria that define a subprime borrower such as past defaults, bankruptcies and foreclosures don’t apply to the United States as a borrower; but yet others do and they are right on point.

For example, you are a subprime borrower if you have a debt-to-income ratio of 50 percent or higher; the United States you has a debt-to-income ratio of 90 percent or higher, depending on your source.

You are a subprime borrower if you have a limited ability to cover monthly living expenses; the United States doesn’t have enough income, taxes, to meet current “household” expenses, yet service the debt – without more borrowing.

You are a subprime borrower if you have to keep borrowing against the equity in your home to meet daily obligations; the United States has already borrowed almost 100% of the GDP – our equity in our country.


You are a subprime borrower if your credit score is below 660, according to an FDIC report of September 11, 2002; the United States doesn’t have a credit or FICO score but it does have a “AAA” rating on its debt thereby qualifying for the lowest interest rate. Someone should ask the Chinese if they feel we are still “AAA”.

You are a subprime borrower if your creditors decide, for any number of factors, that you are a substantial risk to default. Granted individual defaults are sometimes beyond an individual’s control such as illness, loss of income or life changes like death or divorce. Sovereign defaults are by definition political, not financial, decisions. But what happens when a country, any country, whose sovereign debt is beyond servicing and cannot raise enough taxes to meet its obligations is turned away from international credit markets?

Every subprime borrower has a limit to their borrowing – even the United States.

When a government rewards fraud, deceit and corruption at the expense of its citizens; and allows the largest transfer of wealth from average Americans to Wall Street special interests; and shows a governmental inclination to spend, spend, spend when it doesn’t have the income (taxes) to support the spending then this government stands to lose the only reason for its “AAA” credit rating – its credibility and good judgment.