Thumbs down: Chinese rating agency Dagong downgrades US.

Thumbs down: Chinese rating agency Dagong downgrades US.(RT).

Despite a temporary budget compromise in Washington, China's Dagong agency has downgraded the United States. Dangong maintains a negative outlook on the sovereign credit, as revenue and GDP fail to keep up with the country’s massive debts.

The Beijing-based Dagong agency, one of the few notable non-US based credit rating agencies, has downgraded America to an ‘A -‘rating from ‘A’.

The move came shortly after Congress and President Obama narrowly averted a technical default. Fear the world’s largest economy may default on its widely dispersed Treasury Bonds is making investors re-evaluate political and financial stability in the US.

“The government is still approaching the verge of a default crisis, a situation that cannot be substantially alleviated in the foreseeable future," the Dagong agency said in a press release.

Ratings by Dagong are not internationally recognized, and will likely hold only symbolic, and not market, implications.
According the Chairman of Dagong, Guan Jianzhong, current agencies tend to arbitrarily favor developed economies.

On Tuesday, Fitch Agency put the United States’ Triple A rating under a negative watch. The debt ceiling debacle in 2011 prompted a drop in the superpower’s rating from AAA to AA+.

Standard and Poor’s hasn’t issued a warning or downgrade, but released a statement Wednesday calculating the government shutdown didn’t save, but rather cost the US $24 billion.

"The bottom line is the government shutdown has hurt the U.S. economy," the S&P statement said.
 
Political ping pong in Washington may affect future Central Bank reliance on US Treasuries, but for now, most banks are stuck with what they have. 

“For governments and central banks that already hold a lot of treasuries, it’s already too late to exit, from an investment point of view,” Martin W. Hennecke, chief economist at Henley Group Ltd, told RT.

If China or any country starts selling their treasuries, it would send the debt servicing price up, which could quickly inject into markets and kill the sale of all remaining bonds, essentially creating a bubble.
“China is trying to buy more gold, they actually imported over 2 dozen tons of gold over the last two years through HK, and they are trying to increase the gold part of their reserves. It’s difficult for them to do this without driving prices up. Russia and China are both buying,” the Henley Group expert said.
“China understands they made have to eventually write off part of their US Treasury bond part of their reserve currencies,” Hennecke said. Read the full story here.

Mark R.Levin: “Dershowitz is dead wrong."

From ”The Great One”, Mark R.Levin:

“Dershowitz is dead wrong. We don’t have to imagine anything. Congress and only Congress can authorize borrowing under Article I. The president must first pay interest on the debt under the Fourteenth Amendment. The federal government collects ten times as much revenue each month as it needs to cover those payments. As long as the president complies with the Constitution there can be no default. This is basic stuff. Even a Harvard law professor like Dershowitz should comprehend it.

“We are where we are because Obama is an imperial president who has contempt for the Constitution. Imagine what Madison and Hamilton would say about that.”

Senate Deal wanted to Change Rules For Future Debt Ceiling Increases, Congress Would Need Two-Thirds Majority To Stop Obama From Raising Borrowing Limit.

Senate Deal wanted to Change Rules For Future Debt Ceiling Increases, Congress Would Need Two-Thirds Majority To Stop Obama From Raising Borrowing Limit.(Politico).

. . . The Senate plan includes a proposal offered by McConnell in the 2011 debt ceiling crisis that allows Congress to disapprove of the debt ceiling increase, which means lawmakers will formally vote on whether to reject a debt ceiling increase until Feb. 7. Obama can veto that legislation if it passes. If Congress fails as expected to gather a two-thirds majority to override the veto, the debt ceiling would be raised.

The deal would also deliver back pay to furloughed federal workers, require income verification for people seeking health-insurance subsidies under the Affordable Care Act and also allow the Treasury Department to use extraordinary measures to pay the nation’s bills if Congress doesn’t raise the debt ceiling by Feb. 7.

McConnell was pushing hard to include language to give federal agencies more flexibility to implement the sequester, something Reid was objecting to Wednesday morning, sources say. Democrats argue that provision would make it harder to eliminate the sequester in the future and it was not included in the final package. A new round of sequester cuts will be enacted in January without further congressional action, mostly hitting the defense side of spending.Read the full 'Story' here.

Video - Ted Cruz on Senate Plan: “It Is a Terrible Deal for the American People”

"Foodstamp Program Glitch Just a Sign Of things to come"- Shutdown Imminent?

"Foodstamp Program Glitch Just a Sign Of things to come"- Shutdown Imminent?HT: Zerohedge.

When over the weekend, a Xerox "glitch" shut down the EBT system, better known as foodstamps, for nearly the entire day across 17 states leaving millions without "funding" to pay for food leading to dramatic examples of the basest human behavior possible, some of the more conspiratorial elements saw this merely as a dress rehearsal for what may be coming in the immediate future.

While there was no basis to believe that is the case, a USDA (the currently shuttered agency that administers the Supplemental Nutrition Assistance Program) memo obtained by the Crossroads Urban Center in Utah carries in it a very disturbing warning for the 46+ million Americans currently on foodstamps.

To wit: "understanding the operational issues and constraints that States face, and in the interest of preserving maximum flexibility, we are directing States to hold their November issuance files and delay transmission to State electronic benefit transfer (EBT) vendors until further notice." In other words, as Fox13News summarizes, "States across the country are being told to stop the supplemental nutrition assistance program for the month of November, pending further notice."
More on this dramatic development which, if implemented, would will result in significant unpredictable outcomes across the nation:

“This is going to create a huge hardship for the people we serve here in our food pantry,” says Bill Tibbits who is the Associate Director at Crossroads Urban Center.

They posted a letter from the USDA on its Facebook page. It says in part, “in the interest of preserving maximum flexibility, we are directing states to hold their November issuance files and delay transmission to state electronic benefit transfer vendors until further notice.”

“What this means if there’s not a deal, if Congress doesn’t reach a deal to get federal government back up and running, in Utah about 100,000 families won’t get food stamp benefit,” says Tibbits.

In other words, tens of thousands of Utah families may not be able to feed their children come November.
...
“People out here are going to go without food,” says Loralee Smith whose been homeless since August and says the uncertainty is making her uneasy about where her next meal will come from. “I’m on food stamps, I don’t know if I’m going to get them, a lot of people are on food stamps and they don’t know if they’re going to get them.”


Others say if SNAP shuts down, they’ll find a way to feed themselves.

One hopes such "alternative" feeding arrangements will be peaceful, although in the most heavily armed nation in the world, and arguably the one where a massive portion of the population is now fully reliant on the welfare state for virtually every daily need, it is easy to see cutting off daily bread to tens of millions has a less than happy ending.

As the report notes, for people out on the streets like Richard Phillips, "It could impact us and it’s going to cause problems because you’re going to come to find out that people are going to steal and do what they have to do to survive."


Such a realization could come as a very unpleasant wake up call for the millions of other Americans who still live in their Ivory Towers, focusing on the daily gyrations of the S&P500, and largely oblivious of how the rest of America lives.

Shutdown of US govt & ‘debt default’: Dress rehearsal for privatization of federal state system?

Shutdown of US govt and ‘debt default’: Dress rehearsal for privatization of federal state system?(RT).

The inevitable scenario established in the wake of the 2008 crisis is fiscal collapse, leading to “the possible phasing out and/or curtailment of social programs, the privatization of large sectors of public sector activity.”

The fiscal ceiling having now been reached, possibly with a deadline, the government is being pressured by its Wall Street handlers – who control decision-making in the US Congress – to curtail and downsize social programs, as well as initiate the transfer of public assets and institutions into the hands of private corporations. There is also a movement to cut as well as privatize social security and Medicare.
The privatization of public monuments, museums, national parks, the post office etc. has been raised in recent media reports as a possible ‘solution’ to the debt crisis. But let us not be misled: the process of acquisition of federal public property including infrastructure and state institutions is likely to go much further.

The public sector is up for grabs. Wall Street will eventually go on a buying spree picking up state-owned assets at rock bottom prices.

Ironically, the money transferred by the US government to Wall Street under the bailouts in 2008-2009 can now be used by Wall Street to buy out state property and assets. What this means is that the federal government not only finances its own indebtedness, it is also financing the privatization program (at taxpayers’ expense), leading to the demise of federal government programs.
This process of privatization of the state is nothing new, it has been applied in developing countries under the helm of the IMF, whereby state corporations are auctioned off and transferred into the hands of foreign corporations. It has also been applied in Eastern Europe, as well more recently in several countries of the European Union
The proceeds of the privatization program are channeled to the state treasury to meet outstanding debt obligations. In Brazil in the 1990s, important state assets in mining and forestry were purchased by Citi Group, which was Brazil’s largest foreign creditor bank. Ironically, the proceeds of the privatization of the assets purchased by Citi Group were channeled back to Citi Group in the form of debt servicing.
Existing state programs are transferred to private corporations either through outright sale of state assets or through outsourcing of government services to the private sector.
Large numbers of government employees would be laid off as a result of restructuring and privatization. Government services would be sold to the public at a much higher price.

Privatization of American cities

The takeover of State assets in America is well under way largely at the municipal and state level. We recall Orange County, California, which went bankrupt in 1994, Jefferson County, Alabama, which filed for Chapter 9 bankruptcy in 2011, and more recently Detroit, Michigan, in 2013. In these and other county/municipal bankruptcies, public assets, lands and infrastructure are sold off to private investors. Across the US, more than 100 municipalities are facing bankruptcy.
The bankruptcies of local level governments immediately backlash on pension funds. The privatization of federal State assets on a significant scale, as well as the takeover and privatization of public services is the next stage of this socially devastating economic restructuring process.

Speculative onslaught

There is another related agenda, which will be the object of a forthcoming article.
The uncertainty underlying the government shutdown and debt default is the object of a wave of speculative activity on major markets.
Wall Street financial institutions not only exert a decisive influence in the formulation of the administration’s fiscal and monetary agenda, they also control the movement of currency markets, commodity and stock markets through large scale operations in derivative trade.
Most of the key actors in the US Congress and the Senate involved in the shutdown debate are controlled by powerful corporate lobby groups including, of course, Wall Street. The latter are those which ultimately decide on the outcome. They are not only in a position to influence the results of the congressional process, they also have foreknowledge of the nature and timing of key decisions and they are in a position to reap multibillion dollar speculative gains in the derivative markets by speculating on policy outcomes of which they have advanced knowledge.
Those who determine the government’s debt policy, namely the Wall Street creditors, also have ‘inside information’ or prior knowledge of the chronology and outcome of the government shutdown impasse. They will make billions of dollars in windfall profits 
While Wall Street is instrumental in triggering the debt ceiling impasse, major financial institutions will also be placing their bets in large scale speculative transactions.

Because of looming US default, Fitch puts US credit rating under review for downgrade.

Because of looming US default, Fitch puts US credit rating under review for downgrade.(RT).

"Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a US default," Fitch wrote in a release Tuesday afternoon. 

The agency said the US Treasury, though it could still make some obliged payments after October 17, may be exposed to “volatile revenue and expenditure flows” based on the impasse in Washington.
“The US risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of US sovereign creditworthiness and the economy,” Fitch wrote.

Halted talks on raising the debt ceiling risk "undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US,” Fitch went on. “This ‘faith’ is a key reason why the US 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns.” 

"The announcement reflects the urgency with which Congress should act to remove the threat of default hanging over the economy," a US Treasury spokesperson said. 
In August 2011, credit rating agency Standard & Poor’s downgraded the US credit rating from ‘AAA’ (outstanding) to ‘AA+’ (excellent) amid a similar stalemate in Washington on raising the debt ceiling. 
Fitch added that the regularity of the US debt-ceiling fights contributed to Tuesday’s move.

“The repeated brinkmanship over raising the debt ceiling also dents confidence in the effectiveness of the US government and political institutions, and in the coherence and credibility of economic policy. It will also have some detrimental effect on the US economy,” Fitch wrote. 
House Republicans nixed a vote scheduled for Tuesday evening on a plan that would have sought to reopen government agencies and raise the debt ceiling before the US defaults on October 17.
Sources told Politico that the GOP did not have a sufficient number of votes to pass the legislation.
The cancelled vote follows a House GOP proposal earlier Tuesday that was rejected by the White House. 

President Barack Obama said in a Tuesday interview that he expects a deal on the debt to happen, despite the tight deadline."Let's not do a lot of posturing, let's not try to save face, let's not worry about politics,” he told WABC in a note to fellow lawmakers.Hmmm.....If he really wanted to destroy the US as a superpower....would he do anything different?

"Obamanomics" 'U.S. Per Person Debt to Increase 7 Times Faster than Italian Debt'.

"Obamanomics" 'U.S. Per Person Debt to Increase 7 Times Faster than Italian Debt'.(WS).According to the chart, which is based on numbers calculated by the International Monetary Fund, U.S. per person debt is currently $52,900, while Italy's per person debt is $41,200. In five years, America's is projected to be $67,500, and Italy's $43,200. The chart stipulates that these figures are based on "General government (federal, state, and local) gross debt per person in nominal U.S. dollars as projected by the IMF. These alarming numbers come at a time when Europe is trying to figure out how to bailout Italy. "Rising Italian borrowing costs mean analysts expect the Treasury to continue to skew issuance towards the short end of the curve, while relying heavily on domestic demand," Reuters reports.Read the full story here.

Happy Easter America - Obama Orders Press Blackout After US Egan Jones Downgrades US Credit Rating.

Happy Easter America - Obama Orders Press Blackout After US Egan Jones Downgrades US Credit Rating.(PA).A shattering report from RIA Novosti’s Washington D.C. bureau appears to prove that the mainstream press in America 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.The Russian International News Agency (RIA Novosti) is a Russian state-owned news agency based in the capital Moscow whose clients include the presidential administration, Russian government, Federation Council, State Duma, leading ministries and government departments, administrations of Russian regions, representatives of Russian and foreign business communities, diplomatic missions, and public organizations. The White House news briefing referred to in this report occurred this past Thursday (5 April) when Obama regime officials were queried about the latest shock downgrade of the United States credit rating stating that to the American people this critical event should be kept in the category of a “non-story” so as not to confuse and/or shock them. Most surprisingly, this report continues, the mainstream US news media, including their most important television networks and major newspapers, dutifully followed the directives of the Obama regime and failed to uniformly inform the American people of this momentous event. Credit rating agency Egan Jones downgraded the United States Thursday on concern over the sustainability of public debt. Egan Jones is one of the most important ratings firms in the world; they lowered our credit level from AA+ to AA. The firm reduced America from AAA to AA+ in July 2011, just before Standard and Poor's did the same. Egan Jones warned. "Without some structural changes soon, restoring credit quality will become increasingly difficult . . . without some structural changes soon, restoring credit quality will become increasingly difficult." They added that there was a 1.2% probability of U.S default in the next 12 months. The company cited the fact that the US’s total debt, which now equals its total GDP, is rising and soon will eclipse the national GDP; the company sees the debt rising to 112% of the GDP by 2014. Most sadly in all of these events, the once great United States, whose press freedoms were once legendary, has been placed at No. 47 on the world’s press freedom index by the internationally respected Reporters Without Borders (RSF) organization in a stunning move reflecting how deprived of real truth the American people truly are. The great American Founding Father Thomas Jefferson once warned his fellow citizens, “Our liberty cannot be guarded but by the freedom of the press, nor that be limited without danger of losing it.” With that warning going unheeded, however, the quote of the great American author Mark Twain seems to be the more appropriate one to use for this American generation, “There are laws to protect the freedom of the press’s speech, but none that are worth anything to protect the people from the press.”~ Hmmm.......Forgive me but i'll go for this more appropriate quote: “Withholding information is the essence of tyranny. Control of the flow of information is the tool of the dictatorship.” ~ Bruce Coville.Read the full story here.