Can the U.S. repay its debts?

Yesterday, S&P reported that Britain's AAA debt repayment rating was endangered -- lowering it from "stable" to "negative" -- because the U.K.'s debt is approaching 100 percent of its GDP. Since the U.S.'s national debt of $11.3 trillion -- 82 percent of our $13.8 trillion GDP -- is approaching the level of the U.K.'s, it stands to reason that our debt repayment rating might also be vulnerable.

Bill Gross, who in February called for the death of equities in an interview I did with him following which stocks rose by double digit percentages, is now suggesting that the U.S. will eventually lose that AAA rating. On CNBC yesterday, Gross advised people to buy bonds -- what a surprise, since he manages $747 billion worth of them. But he is also advising the U.S. on its $251 billion commercial paper program and its $500 billion fund to buy mortgage-backed securities.

But Gross is so powerful that not only does he advise the government while trading in the very securities on which he is offering advice, but he is free to bite the hand that is feeding him. The key thing to remember about Gross is that he may be right -- as he was when he bought into Fannie Mae debt right before the U.S. bailed it out -- or he may be wrong -- as when he declared the death of equities.

But he will always go on TV and make statements that are designed to boost the value of his investments. And that makes me wonder about where his primary interests lie.

Peter Cohan is president ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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