"Absolutely not!"

"That will never happen to this country."  This was US Treasury Secretary Timothy Geithner's when ABC News asked if he was concerned over a possible downgrade of America's credit rating.

Worries about the US credit rating made the headlines when in early December last year, Moody's issued a report that the US and UK could "test the Aaa boundaries" because of their worsening public finances. Remember the one?

I do. Because it was the first time I read about a Moody's rating sub-classification namely: ‘ resistant' and ‘resilient'. Resistant countries are those whose debts won't exceed levels consistent with Aaa status. Resilient ones - US and UK - are those whose public finances are deteriorating significantly and could test limit of Aaa-rating limits.

But back to Geithner. Being Secretary of the US Treasury, would anyone expect Timmy to tell the world differently? But in a way, he is correct. Just look at how the global financial community queue up to buy a piece of US Treasury paper and the US dollar at mere hints of instability. And China won't be selling its US bond holdings anytime soon. What you think China's a fool?

But somehow I don't know why on reading Timmy's statement, I was reminded by the great economist Irving Fischer's words, "Stock prices have reached what looks like a permanently high plateau." Mr. Fischer pronounced these words on 21 October 1929. A week and a day later -- on 29 October - the stock market crash in what is going to be known in history as the Great Crash of 1929 and a precursor to the Great Depression.

But back to US credit rating. Timmy again has a point. Given that debt levels in almost all other major nations in the world are rising, investors are going to be forced to buy the "lesser evil". UK bonds? It's in the same boat as the US, they will rise or sink together. The Eurozone? Not with the headlines the PIGS are getting these days.

Barclays Capital reported that Portugal's external liabilities are running at Portugal at 108 per cent (€177bil) of GDP, Ireland at 68 per cent (€123bil), Greece at 87 per cent (€208bil) of GDP and Spain at 91 per cent (€950bil). That's just the PIGS. Add Italy at 23 per cent (€347bn) and Eastern Europe's and the total could easily top €2 trillion. And in case you missed it, that's in euros -- which translates to approximately US$2.8 tril.

Japanese bonds perhaps? Perhaps not. Forget about Japan's lost decades. Japan is lost period.

If America's AAA credit rating will "absolutely not" be downgraded despite being trillions of dollars in the red, what does this make of Australia's rating?

The Financial Review reports that the country's economic recovery has delivered "a A$7 billion to the budget bottom line" leading some economists to predict that the budget deficit would come in A$15 billion lower than the Treasury's A$57.68 billion estimate for the fiscal year ended 30 June 2010. Note the word after the numbers start with a ‘B" and not a "TR".

Is there anything higher than a AAA?