Downgrade! What's Next?

Under cover of weekend darkness the dreaded and much telegraphed downgrade of the U.S….S&P, one of the three major credit-rating firms, downgraded its rating for US debt Friday night – a move that has the potential to further spook global markets and drive up borrowing costs in the US. The reason for the downgrade, S&P said, was congressional dysfunction. headlines CSM…

If you think this was all initiated by the rating agencies…….think again. This is the same group that was present giving triple A ratings to all of the debt and companies that were literally bankrupted in 2008. Where were they rating Lehman…AIG…Bear Sterns….GE…GM…etc…?? these banks and companies were loaded with toxic debt to the tune of TRILLIONS that was collapsing under the weight of home prices and they did NOTHING. It was leveraged to the tune of 100:1 in some of these institutions. The initial drop of only 10% in home prices left them immediately bankrupted but there was NO action by the credit ratings agencies to warn us before it happened….or during the initial home price collapse. Many of you may be asking the question of what effect this will have on the system from a practical standpoint. The Fed is totally prepared for this event. We are in a DELEVERAGING cycle from unprecedented massive debt. This deleveraging is being engineered as well as any central agency can manage a catastrophe. Right now they are going to continue kicking the can while the deleveraging continues in the real economy.

Our economy is going through a structural collapse and rebuilding that will last for a decade. We have no one politically managing the fiscal side of policy. It is a disaster. Anyone that looks at this as a blame game for the current administration alone (and they do deserve plenty of blame) is ignorant of the past 30 years of public policy that destroyed the regulations and allowed an out of control banking industry to pump hundreds of Trillions of ponzi liquidity into the world. The same people that oversimplify the current situation as a democrat or republican problem still don’t recognize that the entire political system is completely corrupted now. All three branches of government are now controlled by the influence of the largest corporations and a handful of “elites” (as Beck calls them) that have managed world banks and countries for more years than Count Drakula has existed. You aren’t going to change that and it will continue long after this current debt debacle is over.

There is sun on the other side of this storm but there will be many years of pain ahead for us. Turmoil lies in front of us and we cannot avoid that. Perhaps we do get a conflagration that involves many nations, but that isn’t something I can do anything about. If it happens many of you will probably wave flags like you did on the last two wars thinking its “necessary” as the carefully crafted MSM machine goes to work on you creating another evil empire or dictator. Its funny isn’t it…..”evil empire” speeches by a former President now are so obvious in their objectives.

To the issue of near term effects of this downgrade. Very little. It just sets in place for the public to see that the system is working to “monitor” the “collapse”.
You are welcome to jump on the short bus Monday morning but as most of you know that bus could go over a cliff in a hurry. If you play anything look to catch the short squeezes on Monday. Gold will continue to benefit longer term ….PERIOD!!

Read more at Great Depression 2