Weren't you listening before? Now you're joining my band. Hope you can play guitar.

LONDON: The UK Pound declined against the dollar today after the market digested Moody’s warning about a possible downgrade of the country’s credit rating. “Britain and the U.S. had ‘resilient’ Aaa ratings, as opposed to the ‘resistant’ top ratings on Canada, Germany and France, Moody’s said in a report today,” according to Bloomberg.

Credit-rating agency Moody’s Investor Services on Tuesday warned that the United States and Great Britain may test the limits of their AAA sovereign ratings due to deteriorating public finances.

“These are the AAA countries whose public finances are deteriorating considerably and may therefore test the Aaa boundaries,” wrote Pierre Cailleteau, managing director of Moody’s sovereign risk group…

Britain’s deficit is expected to top 12% of gross domestic product this year, while the U.S. budget gap is forecast to touch 10%.

Britain’s gross debt to GDP ratio is forecast to rise to 69% at the end of 2009 from 47% in 2007. The ratio of U.S. debt to GDP rose to 53.5% from 40.2% a year earlier, Moody’s noted. William L Watts, Marketwatch

This is the second time the NIP has brought this to our readers’ attention, the first was on October 23rd. Moody’s this time is even more specific regarding the conditions that are now pressuring the possible credit downgrade:

Moody’s Investors Service says the U.S. and U.K. must prove they can whittle down their ballooning deficits to avoid threats to their triple-A credit ratings…

Under the most pessimistic scenario put forward by Moody’s, the U.S. would lose its top rating in 2013 if economic growth proves anemic, interest rates rise and the government fails to dent the deficit or recover most of its assistance to the financial sector.

Unlike several years ago, “now the question of a potential downgrade of the U.S. is not inconceivable,” says Pierre Cailleteau, chief international economist at Moody’s. Joanna Slater, Wall Street Journal

Other developments in credit markets today:

• Moody’s downgrades Illinois debt ratings
• Moody’s downgrades Dubai companies
• Swedish banks risk further downgrades
• Greece Rating Cut, Yen Extends Gains, Dubai Loss Deters Risk
• Mexico’s peso suffers biggest tumble in 2 months

Banks, states, and countries are all in danger of having their credit ratings downgraded, some for the second or third time. What has put the US in unprecedented danger? “Ballooning deficits.”

How has Congress and the President responded? Today President Obama announced his intention to expand the debt even further. Harry Reid is pressuring the Senate to pass the most massive spending increase in the country’s history. No sane leaders would pursue such a course unless they had ulterior motives.

The NIP’s position remains that this course of action has two primary drivers. First it is payback to George Soros who stands to make a fortune on the impending collapse of the dollar. More importantly, the resulting destruction of our economy will initiate a crisis which will enable the left to seize permanent control and subvert the constitutional basis upon which this country is founded. This is all about redistribution of wealth. Barack Hussein Obama is doing exactly what he promised: radically transforming America. Congress is helping him, are you?

WASHINGTON

For example, let’s say you are running a household burdened by credit card debt, and that your monthly income is not adequate to pay your bills. Your next course of action? Bankruptcy. Same thing with countries, only it is called default. We saw that just last week in Dubai:

Dubai shook investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001. November 26, 2009. Bloomberg News

How can that happen to a country? By not having sufficient reserves to cover its short term obligations.

Alan Greenspan established a policy of managing debt load by limiting short term debt to the amount of liquid reserves. The thought is that a government should have enough cash on hand to meet short term obligations (less than 12 months) in case foreign creditors should demand payment. This policy is known as the Guidotti-Greenspan rule. It appears that rules are meant to be broken, as far as the current Fed is concerned:

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from? Porter Stansberry, DailyWealth.com

Where will the money come from? The Federal Reserve’s answer is to borrow more money. Try that next time you get behind on a credit card. Just pay it off with another credit card. How long do you think you can keep that up? Can it work any better for a country?

The rising US national debt is the result of many years of congress’s obfuscation and prevarication. Congress uses its checkbook to buy votes, without concern of the underlying damage they are causing our country by increasing our ponderous debt burden.

The Fed borrows money by selling US Treasuries, but appetite for those treasuries is becoming satiated. Several treasury auctions this year have required the Fed to buy its own debt to prop up the price of its securities. When they can no longer borrow money they will just print it. In fact they are already printing dollars like they are going out of style. (They ARE going out of style.)

Moody’s has warned that the US is in danger of losing its AAA rating. When that happens foreign governments will begin dumping dollars, devaluing our currency and causing economic ruin.

Who's Pulling the Strings?

A run on the dollar is not such a bad thing, just ask the biggest financier of this administration, George Soros. Soros made one billion dollars in one day shorting the British pound on September 6, 1992. This trade was the single most profitable trade in the history of the world. Never mind destroying the British pound and the savings of an entire country– George Soros amounted to a modern day Reverse Robin Hood.

With a man like this backing Obama, and with this administration committing financial harikari, you have to wonder. It looks like it will soon be payback time for George Soros. Is he trying this time to make one trillion dollars in one day, someday in our future? Then what is he going to do with that money?