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.