BARACKALYPSE: World Financial Markets, Economy on the Brink; Obama Says Good News Is That It’s Solvable; Collapse Chart

By Mac Slavo
SHTFplan.com
August 8th, 2011

Greg Hunter of USA Watchdog said it best: Brace for Impact.

Today is the day.  Watching mainstream media (MSM) this weekend, you would think a one notch downgrade to America’s debt doesn’t really matter.  For example, former CNBC anchor Erin Burnett said Friday night on CNN the downgrade was “already priced into the market.”  The panel spoke as if the first U.S. debt downgrade in history was no big deal.  To that I say, positively absurd!

…

Economist John Williams of Shadowstats.com has been warning for months about a sudden dollar sell-off.  According to Williams, $12 trillion liquid dollar assets are held outside the U.S. (dollars and Treasuries).  If the holders of these assets throw in the towel and cash out, there could be a severe dollar sell off.  That could spike inflation, cause interest rates to surge and eventually plunge the country into a hyperinflationary depression, according to Williams

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The kind of impact we are going to have will not be like flying into the side of a mountain.  It will be the kind of crash that skids over land, clipping trees and buildings until the plane ends up wingless in a smoldering heap.  I just hope the fuel tanks don’t ignite when the long rough ride is over.

Whether we fly into the side of a mountain or the fuel tanks ignite, the end result will be the same. We’re toast.

The White House, Tim Geithner, and those big-dollar investors (like Mr. Warren Buffet) who stand to lose billions will no doubt move to discredit the ratings agency. In fact, the spin and finger pointing has already begun:

“They’ve handled themselves very poorly. And they’ve shown a stunning lack of knowledge about the basic U.S. fiscal budget math,” Geithner said in his first public comments about the credit rating decision.

…He said, “I think everyone can be confident around the world, that Treasuries are the … most liquid, the strongest place to put your money at a time like this.”

Source: Huff Post

Forgive the S&P, the American public and the rest of the world, Mr. Secretary, if we have a hard time understanding the basic U.S. fiscal budget math, where 2+2=5 and the only way to prevent a debt collapse is to print, borrow and spend as much money as foreign creditors and the US Congress will allow.

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The Teleprompter of the United States, in prepared comments, also weighed in on the discussion in an emergency speech to the press at the White House insisting that the US has no credit risk:

We learned that the United States received a downgrade by one of the credit rating agencies, not so much because they doubt our ability to pay the debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling they doubted our political system’s ability to act.

The markets on the other hand continue to believe our credit status is Triple ‘A’. In fact, Warren Buffet who knows a thing or two about good investments, said “if there were a Quadruple ‘A’ rating I’d give the United States that.”

I and most of the world’s investors agree.

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All of this is a legitimate source of concern. Here’s the good news. Our problems are imminently solvable. And we know what we have to do to solve them.

With respect to debt, our problem is not confidence in our credit. The markets continue to reaffirm our credit as among the world’s safest. Our challenge is the need to tackle our deficits over the long term.

…

There will always be economic factors we can’t control. Earthquakes, spikes in oil prices, slow downs in other parts of the world, but how we respond to those tests, that’s entirely up to us. Markets will rise and fall, but this is the United States of America.

No matter what some agency may say, we’ve always been and always will be a Triple ‘A’ country.

Barack Obama
August 8, 2011
(Watch the full speech)

Mr. President, you’ve had nearly three years, spent Trillions of dollars and we’re nowhere near recovery.

The reality is that our problems are not imminently solvable. It happens to be exactly the opposite because of the very reasons Mr. Obama cited. Our Congressional leaders, as well as the President and his administration, will continue to wrangle over deficits, stimulus, and economic & monetary policy, while the bottom falls out of this economy.

There is simply no way of avoiding the real imminent threat – a total collapse of the system as we have come to know it.

Mr. Obama mentioned several curious economic factors, like earthquakes and oil prices, which he believes are responsible for the “slow down” in our recovery. He also pointed to other countries as variables we can’t control.

What about the slow down in consumer spending right here at home, the non existent two million jobs that were supposed to have been created as a result of the trillions spent, the exportation of jobs to other countries, and the destruction of credit and savings that have been happening throughout your first term?

We may have had Triple ‘A’ credit in the past, but sometime in the late 80′s it should have become apparent to everyone which way our rating was headed. This has been a long time coming. And it’s not just “one of the credit agencies” that is downgrading our debt.

The People’s Republic of China’s top agency has also downgraded us. To suggest that investors around the world still believe in our ability to repay is disingenuous at best:

The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States’ declining ability to repay its debts.

Our downgrade simply reflects reality.

Chairman Guan Jianzhong, August 5, 2011
[Chinese State Sponsored and Controlled] Dagong Global Credit Rating Company

Source: History in the Making

Secretary Tim Giethner, who in April claimed there was “no risk”  that US debt instruments would ever be downgraded still seems to be living in his own parallel universe despite the overt warnings from the Chinese (including their premier), responding to the downgrades over the weekend:

“I think everyone can be confident around the world, that Treasuries are the … most liquid, the strongest place to put your money at a time like this.”

He said he had “absolutely no concern” that China, the largest foreign holder of U.S. government debt, would stop buying that debt.

“They’ve been very strong and I’m sure they’ll be strong investors in the U.S. going forward as will investors around the world,” he said.

Source: Huff Post

In response to President Obama’s statement today that “the markets continue to reaffirm our credit as among the world’s safest” and that most of the world’s investors agree that our debt should be rated Quadruple ‘A’ we need only view the following chart:

Hat tip Drudgereport for the very creative “Barackalypse” headline, Steve Quayle, SGT Report, Greg Hunter, The Daily Crux

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