It Is All In The Perspective

Today Standard and Poor issued a shot over the bough by saying that the outlook on Britain has gone from stable to negative because of massive borrowing to deal with the recession and bank crisis.  This is not a formal downgrade, but it might as well have been given the impact. The projected Britain government's net debt burden will rise close to 100% of economic output by 2013.  As of April 2009, it was 53.2%.  In my opinion, this is the orange flag that I have been waiting for given my concern about the U.S. increasing debt.

As of early May 2009, the U.S. debt is 80.1% Gross Domestic Product based on the current GDP.  The President's 2010 budget estimates indicates that debt will be 97% by 2010 and stabilize at 100% after that.  Looks like this country is going to finish the race before Britain with 100% debt.  Given that, how are we going to fair with Standard and Poor's rating?

Also, today, there was a statement that the offers for homes for sale in the Northeast are 20-30% less than the asking prices.  The bottom in the housing market has yet to show up with steep discounts like this.

For those who are active investors in this market, be very selective and fully conscious of buying and selling.  Remember, I am optimistic in the long run, but I think we are going to experience a giant bump in the investment road, sooner than later.