Are you ready for part two of the global financial collapse? Many now fear that we may be on the verge of a repeat of 2008 after the events of the last several days. On Friday, Standard & Poor's stripped the U.S. government of its AAA credit rating for the first time in history. World financial markets had been anticipating a potential downgrade, but that still didn't stop panic from ensuing as this week began. On Monday, the Dow Jones Industrial Average dropped 634.76 points, which represented a 5.5 percent plunge. It was the largest one day point decline and the largest one day percentage decline since December 1, 2008. Overall, stocks have fallen by about 15 percent over the past two weeks. When Standard & Poor's downgraded long-term U.S. government debt from AAA to AA+, it was just one more indication that faith in the U.S. financial system is faltering. Previously, U.S. government debt had a AAA rating from S&P continuously since 1941, but now that streak is over. Nobody is quite sure what comes next. We truly are in unprecedented territory. But one thing is for sure - there is a lot of fear in the air right now.
So exactly what caused S&P to downgrade U.S. government debt?
Well, it was the debt ceiling deal that broke the camel's back.
According to S&P, the debt ceiling deal "falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."
As I have written about previously, the debt ceiling deal was a complete and total joke, and S&P realized this.
Forget all of the huge figures that the mainstream media has been throwing at you concerning this debt ceiling deal. The only numbers that matter are for what happens before the next election.
The only way that the current debt ceiling deal will last beyond the 2012 election is if Obama is still president, the Democrats still control the Senate and the Republicans still control the House. If any of those things change, this deal ceiling deal is dead as soon as the election is over.
Even if all of those things remain the same, there is still a very good chance that we would see dramatic changes to the deal after the next election.
So in evaluating this "deal", the important thing is to look at what is going to happen prior to the 2012 election.
When we examine this "deal" that way, what does it look like?
Well, Barack Obama and the Democrats get the debt ceiling raised by over 2 trillion dollars and will not have to worry about it again until after the 2012 election.
The Republicans get 25 billion dollars in "savings" from spending increases that will be cancelled.
The "Super Congress" that is supposed to be coming up with the second phase of the plan may propose some additional "spending cuts" that would go into effect before the 2012 election, but that seems unlikely.
So in the final analysis, the Democrats won the debt ceiling battle by a landslide.
25 billion dollars is not even 1 percent of the federal budget. The U.S. national debt continues to spiral wildly out of control, and our politicians could not even cut the budget by one percent.
Somehow our politicians believed that the rest of the world would be convinced that they were serious about cutting the budget, but it turns out that global financial markets are tired of getting fooled.
It has gotten to the point where now even the big credit rating agencies are being forced to do something. Not that they really have much credibility left. Everyone still remembers all of those AAA-rated mortgage-backed securities that imploded during the last financial crisis. The reality is that the big credit rating agencies are a bad joke at this point.
Several smaller credit rating agencies have already significantly slashed the credit rating of the U.S. government. But a lot of pressure had been put on the "big three" to keep them in line.
But now things have gotten so ridiculous that S&P felt forced to make a move.
Sadly, our politicians are still trying to maintain the charade that everything is okay. Barack Obama says that financial markets "still believe our credit is AAA and the world's investors agree".
Once again, Barack Obama is dead wrong.
The truth is that the credit rating for the U.S. government should have been slashed significantly a long time ago. This move by S&P was way, way overdue.
Moody's might be the next one to issue a downgrade. At the moment, Moody's says that it will not be downgrading U.S. debt for now, but Moody's also says that it has serious doubts about the enforceability of the "budget cuts" in the debt ceiling deal.
This crisis is just beginning. It is going to play out over time, and it is going to be very messy.
The following are 8 more reasons why you should be deeply concerned that the U.S. government has lost its AAA credit rating....
#1 The U.S. dollar and U.S. government debt are at the very heart of the global financial system. This credit rating downgrade just doesn't affect the United States - it literally shakes the financial foundations of the entire world.
#2 As the stock market crashes, investors are flocking to U.S. Treasuries right now. However, once the current panic is over the U.S. could be faced with increased borrowing costs. The credit rating downgrade is a signal to investors that they should be receiving a higher rate of return for investing in U.S. government debt. If interest rates on U.S. government debt do end up going up, that is going to make it more expensive for the U.S. government to borrow money. The higher interest on the national debt goes, the more difficult it is going to become to balance the budget.
#3 We could literally see hundreds of other credit rating downgrades now that long-term U.S. government debt has been downgraded. For example, S&P has already slashed the credit ratings of Fannie Mae and Freddie Mac from AAA to AA+. S&P has also already begun to downgrade the credit ratings of states and municipalities. Nobody is quite sure when we are going to see the dominoes stop falling, and this is not going to be a good thing for the U.S. economy.
#4 10-year U.S. Treasuries are the basis for a whole lot of other interest rates throughout our economy. If we see the rate for 10-year U.S. Treasuries go up significantly, it will suddenly become a lot more expensive to get a car loan or a home loan.
#5 The current financial panic caused by this downgrade is hitting financial stocks really hard. The big banks led the decline back in 2008, and it looks like it might be happening again. Just check out what CNN says happened to financial stocks on Monday....
Financial stocks were among the hardest hit, with Bank of America (BAC, Fortune 500) plunging 20%, and Citigroup (C, Fortune 500) and Morgan Stanley (MS, Fortune 500) dropped roughly 15%.
#6 China is freaking out. China's official news agency says that China "has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets". If China starts dumping U.S. government debt that would make things a lot worse.
#7 There are already calls for the Federal Reserve to step in and do something. If the U.S. economy drops into another recession, will we see more quantitative easing? It seems like we have reached a point where the Fed is constantly in "emergency mode".
#8 The U.S. national debt continues to get worse by the day. Just check out what economics professor Laurence J. Kotlikoff recently told NPR....
"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap"
Dick Cheney once said that "deficits don't matter", but the truth is that all of the debt we have been piling up for decades is now catching up with us.
The United States is in such a huge amount of financial trouble that it is hard to put into words. The days of easy borrowing for the U.S government are starting to come to an end. We have been living in the greatest debt bubble in the history of the world, and it has fueled a tremendous amount of "prosperity", but now the party is ending.
A whole lot of financial pain is on the horizon. Please prepare for the hard times that are coming.
I hope everyone will take this opportunity to get out of the market on these up days. Bernanke’s statement today was very weak. I have a feeling, when everyone thinks about it, they won’t be comforted very long. It certainly will not fuel a new rally. I believe the market will be very volatile until Bernanke announces QE3. It will then likely rise for a very short time once this is announced.
Word on the street is that QE3 will invoke a nuclear option of keeping the 10 year T-bill at under 2% interest until further notice. This may well be the last card in the FED’s deck. That means unbridled money printing and debt monitization for the forseeable future.
This will cause rampant inflation which the FED will deny exists. It will cause inflation around the world and the dollar will tank even further.
Boy will this piss off the Chinese.
bye, bye, Mrs american pie
Al, your comment inspired me to write the following……..
Long Long Time ago…..
I can still remember
How that money used to make me smile.
And I knew if I had my choice
That I could hear those peoples voice
And, maybe, they’d be happy for a while.
But September 08 made me shiver
And I began collecting Silver
Bad news on the doorstep;
I couldn’t take one more step.
I can’t remember if I cried
When I read about the housing slide,
But something touched me deep inside
The day the money died.
So bye-bye, to the American lie..
Drove my stock to the top,
And the market went dry.
And them Wall Street boys were thinking risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
Did you write the loans for the Bank,
And do you have faith in Ben Bernank,
for if the Government tells you so?
Do you believe in too big to fail,
Is you house or car for Sale?
And can you teach me how to refinance real slow
Well, I know that you’re still in love with this
cause I see it in your complete abyss
We really both can choose
Man, I hate those derivatives too.
I was a lonely disgruntled American buck
With a sick sensation that started to suck
But I knew I was out of luck
The day the money died.
We started singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
Now for three years we’ve been on our own
While Bank’s got fat on a rollin’ loan,
But that’s not how it used to be.
When geithner says live within our means,
As A puppet from the powers that be
But a silence came from you and me,
Oh, and while the US was looking down,
China is stealing it’s thorny crown.
Europe union was adjourned;
Another bailout was returned.
And while Obama read a book on marx,
The people protested in the park,
And we sold gold in the dark
The day the money died.
We were singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
bets, and debts in a summer sweat.
The stock fell off cause of Euorpean debt,
World Markets high and falling fast.
It’s still too high for the price of gas.
The politicians debt bill did pass,
With downgrade rating in a flash
Now the European air was filled with fumes
All the riots were just starting to exhume.
We all got up to fight,
Oh, but we never got the right
`cause the FED tried to print some more
The money they added was making us poor.
Do you recall the horror
The day the money died?
We were singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
Oh, and there we were all in one place,
401 k’s all lost in space
With no time left to start again.
So come on: Ben be nimble, Ben be quick!
The Federal Reserve and that magic stick
Cause the printing press is the devil’s only friend.
Oh, and as I watched him on the stage
My hands were clenched in fists of rage.
No angel born in hell
Could break that Chairmen’s spell.
And as the Gold climbed high into the night
To light the path that was actually right,
I saw Bernanke laughing with delight
The day the money died
He was even singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
I bought some gold and sang the blues
Hoping for some happy news
Banks got tired and burned away.
I went down to the coin store
Where I’d bought silver years before,
But the man there said my money wouldn’t pay.
And in the Wall street: the brokers screamed,
The CEO’s cried, and oil creamed.
But not a word was spoken;
The global markets all were broken.
And the two men I admire most:
Ron Paul and the Thomas Jefferson’s ghost,
They caught the last train for the coast
The day the money died.
And they were even singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
they were even singin’,
“bye-bye, to the american lie.”
Drove my stock to the top,
And the market went dry.
And them Wall street boys were thinkng risky with lies
Saying’, “this’ll be the day that we die.
“this’ll be the day that we die.”
Things are so ridiculous right now in England that if Charles Dickens were alive today, he’d become a supporter of Ayn Rand.
Talk about an absolute and global repudiation of liberal-Progressive ideology, child rearing, and behavior….that is, to those who are paying attention.
Why does anyone give any creditability to these scum, bag rating agencies???
They were rating AAA the crap on wall street that helped crash the economy
we have got to get rid of obama and all his socialist cronies. we are headed down faster than you may think
I wish obama was socialist. Loose the fox news BS and look at what this “socialist” has done-same bush policies.
Only someone who does not think for themselves would ever accuse obama of being a socialist.
29 years old, 1 month old lil girl, selling the crap outta ADT security systems to scared folks just like me. Saving my measley greenbacks for an AR and a basement full of green bean. How the phuck did we get here??? How is it possible that a small town kid like me, with just a high school education can see the writing on the wall but so many around me just swallow the piles of shat the fat cats on the hill and in the media dish out. I got news for all of us. This ain’t the country my grandpa fought and toiled his life away to pass on. We are sick and the colon cleansing is about to begin. I asked my mama what she wanted for christmas, she said “Good will on earth and peace for all men” I handed her a Bushmaster AR-15 told her “It was a do it your self project.” Good luck folks, I’ll be holding out in Southern IN. Eating good, right next to a thriving Amish community. One hand on my rifle the other on my fishing pole. Country Boys Can Survive
The opinion of the credit rating agencies should not matter at all. As a sovereign country, the United States of America has not, does not and will not need to borrow money for any legitimate purpose approved by its people. The credit rating downgrade, the default hysteria and the debt crisis itself is a massive charade and fraud perpetrated on the American people. The solution to this contrived crisis is simplicity itself:
http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DEuDGguGn5Xg%26feature%3Drelated&h=BAQBKqb1nAQDE6KFYuATfjVrRaYSBA5z2T3RWNsO8-XPlgA
I just obtained your article published on the following website which has a lot of similar very interesting articles of many world effecting subjects which you might all find interesting. Most of the comments made seem to be spot on!
My personal conviction is that,things have to get worse before they can finally get better,as the whole world is “un-done” because of the Merchants as listed in the book of Revelations Chapter 6 and Chapters 17 and 18 and shows the consequence of their corruption and iniquities.
May God help all of the innocent little people who constantly suffer at the hands of the Merchants.
The following website which has a lot of similar very interesting articles of many world effecting subjects, which you might all find interesting.See:- http://www.endtimeinfo.com
Most of the comments I have read to your article seem to be spot on!
My personal conviction as a Christian is that,things have to get worse before they can finally get better,as the whole world is “un-done” because of the Merchants as listed in the book of Revelations Chapter 6 and Chapters 17 and 18 and shows the consequence of their corruption and iniquities.
May God help all of the innocent little people who constantly suffer at the hands of the Merchants( the invisible government)
CAN YOU BELIEVE THE ULTRA-RICH ARE PROFITING FROM THESE TIMES OF ECONOMIC CHAOS!
(click on my profile name to go to my blog to see full video)
watch the 7 lifecycles of a country to see why we are going bankrupt and what we all need to do right now… see how the top richest people are protecting themselves and their families and how you can do the same
I’m posting my blog video here because I need to reach out to the real people who are effected by the Global Economic Crisis. Please pass this video on.
The market continues its downward spiral. We are repeating the same mistakes they made just before the crash in 1929.
We never seem to learn from history.
When will the government quit spending more of our money than they are taking in?
I’ve pretty much taken all my money out of stocks, and was searching for something to do with it when I found this site put together by a millionaire:
How to Profit like the Ultra-Rich in Times of Economic Chaos
Free Video here-
http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bid=290b868b&chan=y
BILDERBERG 2011 MEETINGS: Economic Collapse – Imminent Global Financial Crisis and U.S. Dollar Collapse!
*** globaleconomicvideo.blogspot.com ***
I’m posting my blog video here because I need to reach out to the real people who are effected by the Global Economic Crisis. Please pass this video on.
Government is only thinking of
what will get them more money
and get them re elected.
Ben Bernanke’s announcement that the Fed would be investing in long-term bonds yesterday, instead of the stock market, looks like it has triggered the October 2011 Stock Market Collapse I have been predicting since January. The S&P fell 35 points after the announcement, the Dow fell 300 points and according to the futures market, today could be another equities bloodbath!