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Calm as Hindu Cows

 

 

US Credit Rating Placed on Negative Watch List  (VIDEO)

 

Skippy Massey
Humboldt Sentinel

 

Trapped in a flying illusion of safety, we meet Tyler Durden:
soap maker, connoisseur of explosives, and a great judge
of briefcases.  Mr. Durden cuts to the chase:

Oxygen gets you highIn a catastrophic emergency, you’re taking giant panicked breaths.  Suddenly you become euphoric, docile. You accept your fate.  It’s all right here.  Emergency water landing – 600 miles an hour.  Blank faces, calm as Hindu cows.”

And so does the average American see the economy:  Quantitative Easing, the dollar, and the tacking of our debts onto the national credit card.  It’s just like breathing pure oxygen.

Not everyone feels that way.  Take our lenders, for example.

dagong1Chinese rating agency Dagong Global Credit Rating Co., founded in 1994 and one of the largest and most respected firms in China, announced on Christmas Day that it has put the local and foreign currency sovereign credit ratings of the U.S. on a negative watch list.

China is the largest foregin owner of US debt with holdings of $1.2 trillion dollars in US Treasury securities.

“The squabbling between the two political parties on raising the US debt ceiling reflected an irreversible trend on the United States’ declining ability to repay its debts,” Dagong Chairman Guan Jianzhong said.

“The two parties acted in a very irresponsible way and their actions greatly exposed the negative impact of the US political system on its economic fundamentals,” he said.

“In regards to the US debt crisis, each political party is insisting on a proposition that is favorable for its own interests,” the Dagong company said in a statement on its website.  “Therefore, it will be difficult to form a long-term consensus on solving the debt problem,” it said.

dagong3The debt burden of the US federal government increased 9.1 percent year in 2011 and 11.7 percent in 2012, far exceeding the country’s nominal GDP growth rate of 3.9 percent in 2011 and 3.4 percent in 2012, Dagong said.
 
Dagong said it expects the outstanding debt of the United States to rise to 104.8 percent of its GDP– and 608.7 percent of its fiscal revenues by the end of 2012– indicating that our solvency is experiencing a descending trend.
 
“Due to the pending fiscal problems, the US economy is likely to fall into recession in 2013 and stay weak in the long-term which will further weaken the material basis for the government to repay debt,” their statement said.
 
Dagong downgraded both the local and foreign currency sovereign credit ratings of the US from A+ to A, each with a negative outlook.  The credit rating is identical to that of Spain’s.
 
The U.S. Securities and Exchange Commission has refused to recognize Dagong’s ratings because of the commission’s inability to supervise the Beijing-based agency.  To note, Dagong translates into English as meaning ’impartial and without prejudice’.
 
In its report, Dagong noted:
 
  • freedom2The partisan political conflict and lack of national debt management have pushed the creditworthiness of the federal government to the brink.  The decline of political decision-making will lead to weakened solvency.
  • With no fundamental plan and measures for solvency in place, the US government is lacking the willingness of debt repayment and the depreciation of outstanding debt, indicating a trend towards implicit default.  Quantitative Easing
    is leading to continuous credit expansion and maintaining consumption through borrowing, and taking advantage of the status of the US dollar without touching on the ultimate issue of willingness to repay.  Creditors have been suffering real losses from the consequent and persistent devaluation of the outstanding debt.
  • The deterioration of factors impacting the federal government’s solvency has further widened the degree of deviation between debt repayment sources and real wealth creation capability.
  • The US economy will probably fall into recession in 2013 and stay weak in the long term which will further weaken the material basis for the government to repay debt.  The US is facing an unprecedented crisis of excessive credit.  The inevitability and chronicity in the credit bubble burst will directly lead to the continued slump in total social consumption, triggering a chain reaction of long-term economic downturn.
  • DDagong2ebt limit lifting and debt monetization are becoming the long-term policy of the United States, and real solvency of the government will continue declining.  In order to avoid suffering an economic recession resulting from the unabated long-standing and excessive credit expansion, the US government has adopted an even greater unconventional credit expansion by dragging the country into a cycle of continuously lifting the debt limit to stimulate the economy by excessive issuance of the dollar.  As the resulting risks of dollar depreciation keep accumulating, the decline
    in real government solvency becomes persistent, and the vulnerable
    credit relationships bear increasing risk of breaking due to the occurence
    of emergencies and the debt limit.
Dagong concluded:
 
In summary, Dagong views that as the negative effects from key factors affecting U.S. federal government solvency– such as the debt repayment environment and wealth creation capability, debt repayment has been increasing.  Emergencies such as the fiscal cliff and the debt limit will further increase the vulnerability of government solvency.

Therefore, Dagong has put the U.S. federal government credit ratings on the negative watch list. Dagong will adjust the credit ratings according to the real circumstance to reflect the soundness of the U.S. federal government debt.

 
freedom1Partisan bickering and Quantitative Easing aside, we still have an ace in the hole for strengthening the dollar, paying our debts, and remaining calm.
 
Our military strength and the ability to use it.
 
With the United States as the largest manufacturer and distributor of arms throughout the planet– our number one domestic export product– there are new global territories to explore and expand into militarily and domestically.
 
We don’t call it colonialism or imperialism anymore.  It’s just a new way of doing business, a New World Order, as George H. Bush plainly said following the invasion and defeat of the Iraqi forces in Kuwait during the 1990 Gulf War.  His son George W. finished the job by beating Iraq down to its wobbly knees in the second Gulf War, taking out an evil dictator, and crippling a country while stabilizing the region’s oil producing capability for allied businesses.
 
As the dust settles on the Middle East we’re now setting our lofty sights elsewhere:  Africa.
 
treadHolder of 8-10% of the world’s energy resources and increasingly becoming our primary global source for oil and gas over the Middle East, we have plans for placing military advisors in 35 African nations soon– as the Associated Press reported last week.
 
That could strengthen the dollar’s depreciating position, relinquish our debt, and satisfy China and Republican neocons while maintaining our strategic dominance– while remaining as calm as Hindu cows.
 
 
 
 
 

One Response to “Calm as Hindu Cows”

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  1. [...] We’ll be at the the point of no return:  unable to repay debts and further borrow, lenders not willing to lend anymore, treasury and bond markets defaulting, and the ‘full faith and credit’ of the US [...]


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