Is America Defaulting On Its Sovereign Debt? US Treasury Bonds Are Junk Bonds? Can You Trust the Wall Street Credit Rating Agencies?

By Matthias Chang * Global Research

Rating Agency Upgrades US Sovereign Credit Rating: Another Propaganda Attempt to Mislead the Public

Recently, I wrote an article explaining why US Treasury Bonds are junk bonds and why rating agencies cannot be trusted at all, because they have been up to their eyeballs in fraudulent activities.

I wrote that what I am stating may seem outlandish but it reflected reality – that the US as well as its ally in crime, the United Kingdom (UK) are bankrupt. Very few economists dare assert such a conclusion because it would be a death sentence for their careers.

So, who can you trust anymore?

But, does it require so much courage to expose the ugly truth when there are so much evidence to support what I have stated in my articles which can be gathered even from the mainstream media?
It was taboo to suggest before the Global Financial Tsunami that America was a bankrupt state and does not deserve an AAA rating. Yet, it took a rating agency from China in early 2011 to break the taboo,

China’s Dagong credit rating agency says the U.S has already defaulted. As AFP reports:

“‘In our opinion, the United States has already been defaulting… Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies – eroding the wealth of creditors including China, Mr Guan said.”

This follows on the heels of German credit rating agency Feri’s downgrade of U.S. bonds a full notch – from AAA to AA – saying:

“The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures,” said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. “Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted.”

I would suggest that Dagong and Feri were rather generous in their rating for obvious reasons (China being one of the largest creditor cannot afford to trigger an immediate collapse of US bonds). If a country has defaulted, its credit standing cannot be rated as AAA. It is a junk debtor, no two ways about it!

If Joe Six-Packs defaults on a loan, no banks, credit-card companies etc. would extend further credit facilities. Period!

In November, 2011, the Guardian reported as follows:

Dagong, which has maintained a pessimistic outlook on US fiscal policy, has been leading the charge to downgrade US debt over the last 12 months, lowering the US rating from AA to A+ a year ago.

In August it downgraded US debt again, to A. Days later, Standard & Poor’s followed in its wake, becoming the first western agency to downgrade US debt after the threat of a default was narrowly avoided following weeks of political squabbling in Washington over whether President Obama should be allowed to raise the US debt ceiling.

So, why are the so-called economists so reluctant to tell the simple truth? Why are these economists not writing articles to expose the ugly truth and save Joe Six-Packs from having their hard-earned money from being wiped out by inflation and confiscations etc.?

The reason is simple. They have sold their souls.

And this cowardice is unforgivable because the taboo has already been broken – two agencies have exposed the reality. So, is my article stating that US Treasury Bonds are junk bonds really that outlandish?? Even the S&P down- graded the US albeit not to junk status!

The above downgradings were made even before the massive QEs by Bernanke. The financial status has not changed for the better since the down- grades, in fact it has gotten worse and have caused panics and dissension within the ranks of the financial elites.

Bloomberg reported that,

Federal Reserve Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing by the central bank, called for a reduction in the $85 billion in monthly asset purchases while saying he sees an end to a three-decade bull market in bonds.

In an interview with Forbes, Alan Greenspan, former FED Governor said,

We have at this particular stage a fiat money which is essentially money printed by a government and it’s usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity… There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.”

Given the fact that US cannot mathematically repay its debts at all in the next fifty years, how can any reasonable man and or economist not conclude that the US Treasury Bonds are indeed junk bonds?

If anyone still believes in the fancy economic fairytale dished out by presstitudes, financial harlots etc. they deserve to be wiped out.

The situation gets more absurd as only a few days ago, the S&P rating agency upgraded US from negative to stable because:

Under our criteria, the credit strengths of the U.S. include its resilient economy, its monetary credibility, and the U.S. dollar’s status as the world’s key reserve currency.  Similarly, in our view, the U.S.’s credit weaknesses, compared with higher rated sovereigns, include its fiscal performance, its debt burden, and the effectiveness of its fiscal policymaking.  We are affirming our ‘AA+/A-1+’ sovereign credit ratings on the U.S.  We are revising the rating outlook to stable to indicate our current view that the likelihood of a near-term downgrade of the rating is less than one in three.

By what measure is S&P saying that the US economy is resilient?

By what measure is S&P saying that there is monetary credibility when even Alan Greenspan is calling for a scale back of QE?

How can there be any credibility when the US is paying for its imports with digitally printed money, which in turn is recycled back into US treasury bonds and other US$ assets and repays the outstanding debts with more digitally printed money? In crude terms, its pays for imports with US$ toilet paper money and repays its debts with more US$ toilet paper money. It still remains as the world largest debtor!

continue article at Global Research:

http://www.globalresearch.ca/us-treasury-bonds-are-junk-bonds-is-america-defaulting-on-its-sovereign-debt-can-you-trust-the-wall-street-credit-rating-agencies/5338764