Credit rating downgrade for America

A wheelbarrow of money to buy a loaf of bread. This is what Obama, with his fiscal cliff plan, threatens us with.
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America saw another downgrade on its credit rating last week. The White House ordered the press to keep quiet and they meekly obeyed. But that’s not the worst problem. If the Big Three follow through on the downgrade, prices of all commodities, including gold, silver, and oil, could rise sharply.

Credit rating action

Egan-Jones Ratings Company (EJR) is an independent credit rating company that answers only to investors. No company or government that issues commercial or sovereign debt has any influence over its decisions. A source familiar with such matters (specifically an account executive for a major precious-metals brokerage firm) pointed out to CNAV that the Big Three credit rating agencies (Standard and Poor, Moody, and Fitch) all work under such influence. Therefore, if any country’s sovereign debt deserves a downgrade, Egan-Jones will downgrade it first. The Big Three will follow Egan-Jones’ lead when they can no longer deny the reality.

In 2008, Egan-Jones was first to predict the crash of the housing market. Last year, they were the first to downgrade the American credit rating from AAA to AA+. Standard and Poor merely followed Egan-Jones’ lead.

Federal Reserve headquarters. Their monetization of the debt caused another credit rating downgrade.

The Marriner S. Eccles Federal Reserve Board Building. Photo: User Cliff1066/Flickr, CC BY 2.0 Generic License

On Thursday, 5 April, Egan-Jones Ratings downgraded American sovereign debt again. The American credit rating is now AA.

Egan-Jones will not normally share its reports with anyone other than a client. But they did speak to Reuters News Service. Richard Leong reports that Egan-Jones acted as they did because the Congressional “super-committee” had failed its mission.

Without some structural changes soon, restoring credit quality will become increasingly difficult.

In other words, if the United States government wants its AAA credit rating back, it must change the amount of money it spends, and fast.

Egan-Jones accused the Federal Reserve of “monetizing the debt.” It also said that the Federal Reserve might lower interest rates by so doing, but eventually that would fail, too.

Press inaction

The mainstream press, aside from this report in Business Week, have said nothing about this downgrade. And the European Union Times scathingly paraphrased RIA Novosti as saying that the American press

has become nothing more than a propaganda arm of the Obama regime when during a White House news briefing this past week they were effectively ordered not to report on this past weeks credit rating cut of US government debt.

Alternative-media columnist Allen Roland said flatly that

the United States is in a deep depression.

Roland gave these details:

Reality is finally coming to the surface. The stock market is not the American economy. Eighty percent of the stock market is basically high frequency trading of the big boys playing games with their money.

And 61 percent of the American debt is being bought by, guess who? The Fed (US Federal Reserve Bank) – So we’re printing money. So let me give you the raw economic numbers, which basically what this is telling us – raw economic numbers about the American economy.

38 percent of all Americans are either considered to be low income or living in poverty; 57 percent of all children in the US are living in homes that are either considered to be low income or impoverished; the average amount of time a worker stays employed in the US is now over 40 weeks and according to the Bureau of Labor Statistics, 16.6 million Americans were self-employed in 2006; today that number is 14.5 million.

So, we are still in the midst of a depression. The administration is doing everything it can do to paint a rosy picture, but has nothing to fall back on.

CNAV‘s gold-and-silver source sounded a more immediate warning:

The last time Egan-Jones [lowered the US credit rating], gold shot up $100 an ounce. We could see that again.

Obviously all commodities could follow the lead of gold and other precious metals.

Senator Kent Conrad (D-ND) said yesterday that he does not expect the Senate to pass a budget until after the election. Now that Egan-Jones has sounded its warning, that might be far too late.

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Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

12 Responses to Credit rating downgrade for America

  1. This, again is more evidence of Obama’s failed socialistic financial policies. His Communist type distribution of wealth weakens the whole country. But, why would we be surprised with the Marxist mentalities he has running the beauacracy?

    One has only to look what happened to the former USSR and Communist bloc countries. And, the US can never make the excuse that it has never been warned. The life and testimony of the former Richard Wurmbrand is an indictment of a political system that is foul to the core:

    “Richard Wurmbrand:”

  2. […] “Credit Rating Downgrade For America:” […]

  3. […] […]

  4. JT says:

    Ok, two things: firstly Egan-Jones is the smallest of the ratings agencies and probably the least influential.

    I’m also not sure what you mean about the press being silent on the issue. A 10 second Google search brings up:
    http://news.yahoo.com/us-credit-rating-downgraded-again-050101872.html
    http://www.businessweek.com/news/2012-04-05/egan-jones-cuts-u-dot-s-dot-rating-one-step-to-aa-citing-growing-debt
    http://online.wsj.com/article/BT-CO-20120405-714290.html
    http://rt.com/business/news/us-debt-crisis-rating-agency-egan-595/
    http://www.bloomberg.com/news/2012-04-05/egan-jones-cuts-u-s-rating-one-step-to-aa-citing-growing-debt.html

    So all the financial media seem to be covering it. Are you expecting it to be on the front page of the New York Times? Not going to happen, unless it’s Moodys or the other one that announces the downgrade. Eden-Jones simply isn’t newsworthy… unless you’re trying to provoke panic amongst right-wingers.

    Also, given the links above, I would say that your claim that Obama silenced the media is… shall we be euphemistic and say “misguided?”

    • Terry A. Hurlbut says:

      I do indeed expect this to be front-page news. I expect that the agency, however small, that has set a lead that the Big Boys always end up following, to have the recognition due a source for a big scoop, at least. If I cannot expect my competitors to be virtuous, I expect them to be ambitious. And therefore, when they “spike” a scoop like this, I suspect that their motive might lie elsewhere than in scooping one another, and might lie instead in furthering the “Obamist” cult.

  5. JT says:

    But that’s the problem – the big boys aren’t following suit. Not only that, but the stock market didn’t even flinch. Neither did the bond market. That’s how influential they are.

    It’s not a scoop, it’s a non-event that 99% of your average paper’s readers don’t care about, and wouldn’t understand even if they did.

    It’s big of you to admit, however, that you’re basically making it up about Obama ordering the papers to be silent. Now, even if he was able to do that, imagine how they’d be scooping each other to print that.

    It doesn’t help your credibility any when you lie.

    Besides, given how Moodys gave good ratings to all the financial products, just before the credit crunch, I’m surprised people still pay attention to them.

    • Terry A. Hurlbut says:

      The stock market didn’t even flinch? ROFL! What do you call the performance of the stock market over the last couple of days? SELL, SELL, SELL! And not just sell. Sell short.

      They know.

      • JT says:

        Which is why it closed up 1.41% yesterday at 12,986.58. That’s getting pretty close to it’s all-time high.

        So, yes, the market didn’t flinch. Downgrade happened on the 4th. Market dipped on the 9th – due mainly to profit taking and fears that Spain would be the next country to require a bail-out.

        It does not take 5 days for a market to respond to something like a downgrade.

        Admit it, you’re just fear-mongering. Again.

        • Terry A. Hurlbut says:

          Sure, it closed up 1.41 percent yesterday—on lower volume. That’s called “buying to cover short sales.”

  6. JT says:

    Wait… so the market going down is proof… and the market going up is proof.

    How convenient.

    • Terry A. Hurlbut says:

      Never forget the volume. When the volume goes down, moves in the indices mean something entirely different from the usual. Stocks down on lighter volume: profit-taking. Stocks up on lighter volume: short-covering.

      Stocks up on heavier volume: going long. Stocks down on heavier volume: selling short.

  7. […] a deadbeat. In July of 2011 they downgraded US debt from AAA to AA+. In April of this year, they downgraded US debt again, to AA. And now they have acted […]

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