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The United States can still pretend it is a “AAA” credit-risk, and cling to that farcical label for a few more months. However, prices for credit default swaps (i.e. insurance against default on debt) show that California is considered a higher risk than Russia, and New York city is a worse risk than Turkey, according to data released by Bloomberg.

In fact, the general trend is that credit default prices are falling for most “emerging markets”, and rising for most of the “industrialized” countries. This trend comes down to one basic fact, emerging-market nations are paying their bills, while most of the supposedly “wealthy” industrialized countries are not.

This data has obvious implications for the debt of the U.S. federal government, since the only thing separating the debt of the federal government from the California state government is that the federal government can print money – and now does so just to pay the interest on the ever-increasing trillions of dollars of debt. In fact, the U.S. federal government alone has a debt load roughly equal to all the other 95% of the world's population, and that does not include the $70+ TRILLION in “unfunded liabilities”. Nor does it include the other 80% of the $57+ TRILLION in total public and private debt.

Thus, ignoring 90% of the total debt and obligations of the United States, it still owes as much as all the rest of the world combined. This is the result of 30 years of telling the rest of the world that “deficits don't matter”.

And much like the behavior of parents influences the behavior of their children, the complete absence of fiscal responsibility from the federal government has been emulated by state and local governments around the U.S. (see “California says “no” to accepting its own IOU's”). The savage budget-slashing currently being engaged in by state and local governments struggling to avoid bankruptcy essentially totally offsets the meager “stimulus” plan of the Obama government.

This means the $2 trillion of lost spending-power in this consumer economy will keep the U.S. economy in a self-perpetuating downward cycle, which can only be halted by massive stimulus – great enough to offset all or most of that lost spending. However, with revenues plunging for all levels of government at the greatest rate in history, such massive spending would almost certainly push the U.S. economy into a hyperinflationary debt spiral – fulfilling the prediction of a “hyperinflationary depression” put forth by John Williams of Shadowstats.com.

The reason why the U.S. (and its various state and local governments) are so desperate to try to cling to credit ratings they don't deserve is that when you owe such astronomical sums of money (dwarfing the GDP of the entire U.S. economy), then even small increases in interest rates (as credit-ratings decline) translate into billions of dollars less to attempt to resurrect the U.S.'s zombie-economy.

As Bloomberg points out in its article, all that many “emerging market” economies have had to do to pull themselves out of the global recession is dip into their surpluses. Thus, contrary to many hysterical commentaries from U.S. sources, there are no “bubble” risks in these emerging markets, since asset bubbles only come into existence when economies (or economic sectors) become “highly leveraged” (i.e. fueled by debt).

As the most highly-leveraged economy in the history of the world, the U.S.'s Ponzi-scheme economy is riddled with “bubbles”: the housing bubble, the bond bubble, the equities bubble, the pension bubble, and (of course) the U.S. dollar bubble.

When the currency of a hopelessly insolvent nation is backed by nothing (ever since Nixon defaulted on the U.S.'s gold-obligations) then obviously the real value of that currency is zero. Conversely, in the wealth-producing nations of Asia, operating with budget surpluses, their currencies have some intrinsic value (as IOU's) – since these countries can (and do) pay their bills/debts.

Essentially, every morning the U.S. federal government is borrowing another $5 BILLION – and much more if you don't believe its scam-accounting. In the eight years of the Bush regime, the total of all the annual deficits was less than $2.5 trillion, yet the actual total increase in debt was nearly $5 TRILLION (and, again, this does not include the $70 trillion in “unfunded liabilities”).

Given that Obama regime has kept many of the same cast of liars in his government as left-overs from the Bush regime, there is every reason to believe that Obama's 'accounting' will also only report about half of the actual deficits he's racking up. It is a sad commentary on the arithmetic skills of the U.S. media and the U.S. public that virtually no Americans are even aware of the fact that the U.S. government has only been reporting about half of its official debt each year.

Once a year, the Treasury Department calculates the annual U.S. deficit using exactly the same rules which all U.S. corporations are required by law to use (“GAAP accounting”). When the Treasury Department did those audits during the Bush years, the real annual deficits ran as high as $5 TRILLION/year – meaning that in some cases the “official” deficits of the Bush regime reported as little as 5% of the actual increase in indebtedness.

Decades of pretending that “deficits don't matter”, and many years of absurdly fraudulent accounting have produced their inevitable result. The greatest dead-beat in the history of the world is rapidly running out of credit, and headed for a debt-implosion that will make the collapse of the Soviet Union look like a picnic. The ominous rumblings in the credit-default market are the approaching thunder of a debt-maelstrom.

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