With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.

The United States government alone will need to borrow nearly $2 trillion in 2012, to bridge the projected budget deficit for that year and to refinance existing debt.

Indeed, worries about the growth of national, or sovereign, debt prompted Moody’s Investors Service to warn on Monday that the United States and other Western nations were moving “substantially” closer to losing their top-notch Aaa credit ratings.

via Payback Time – Avalanche of Maturing Junk Bonds Looms for Markets – NYTimes.com.

This may actually makes the subprime loan debacle look timid. What’s sad is that this will be used by conservatives to promote belt-tightening by the federal government. Where were they during the eight years of the Bush administration and the Iraq war?

I suppose some measures will have to be taken to stop the federal deficit from increasing. Hopefully, the Congress and the White House will not first go to cutting social programs to the bone and look at other things that could possibly be cut back on.

As for corporations whose bonds are set to mature if they can’t raise new capital or even default on their debt, can we continue to bail them out? I would say that this is not likely. Their days of getting corporate welfare seem to be numbered. We’re going to have to rethink the entire economy of the United States. Hopefully we’ll move from the neo-liberal, free market, Friedmanesque ideology to something more democratic.