Beware the Ides of March

NEW YORK CITY: Beware the Ides of March, so the seer warned Julius Caesar in 44 B.C. Twenty centuries later another seer warns a modern-day Caesar that his course of reckless spending threatens the destruction of our country. Like Julius Caesar, Caesar Obama pays no attention to the soothsayer.

On March 15 Moody’s warned the US for the 3rd time that the impending downgrade of our nation’s credit rating is looming:

The gold-plated credit rating of the United States — an article of faith across America and, indeed, around the world — may be at risk in coming years as the nation copes with its growing debts…

Moody’s said the United States and other major Western nations, particularly Britain, have moved “substantially” closer to losing their gilt-edged ratings. The ratings are “stable,” but “their ‘distance-to-downgrade’ has in all cases substantially diminished,” the credit ratings agency said…

“Growth alone will not resolve an increasingly complicated debt equation,” Moody’s said. “Preserving debt affordability” — the ratio of interest payments to government revenue — “at levels consistent with Aaa ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.” [Empahsis added] David Jolly and Catherine Rampell, New York Times

Likely scenarios if the US loses its triple-A rating:

• Interest rates skyrocket
• Catastrophic failure of housing markets
• Massive layoffs by companies unable to finance their business business
• US dollar collapses
• USA, unable to borrow from China, defaults on debts
• Fed prints money, inflation ensues
• Destruction of world financial markets
• Collapse of worldwide economy

The 2008 run on banks was only forestalled by massive influx of cash into financial markets, made possible only by massive borrowing. This time borrowing will be impossible.

These scenarios will trigger massive rioting in the US the same as Greece has already experienced due to the collapse of their economy. That is the meaning of Moody’s warning “fiscal adjustments of a magnitude that, in some cases, will test social cohesion.” It is the NIP’s position that such a financial collapse and subsequent civil breakdown is exactly what this administration wants. This breakdown is the objective of the Cloward-Piven Strategy.

Faced with civil unrest Obama will finally be able to organize his national police force “just as powerful, just as strong, and just as well-funded” as the US Armed Forces. Unconstitutional you say? Well, Obama views the Constitution as “deeply flawed” and will not let it stop him on his quest to establish Marxist rule in America. Every Marxist revolution ends with its own despotic ruler. This one’s will be Caesar Obama.

…Why are they clapping?

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?

Zimbawe 100 Trillion Dollar Note

WASHINGTON: The US Debt has just topped 12 trillion dollars and is still climbing. If anything, the rate of acceleration is increasing, so we can look for more rampant spending to come. Our counter in the right column shows a running total so you don’t miss a minute of the action. USDebtClock.org gives a great snapshot of the whole picture. The US Department of the Treasury updates their website once per day, found here.

$12 trillion in debt cannot be paid off without draconian measures. Our federal reserve is printing currency like it is going out of style. (It IS going out of style.) This policy devalues our currency and will ultimately lead to runaway inflation. History has shown over and over again the fallacy of this approach. Countries like Zimbawe who try it end up destroying their currency,  their economy, and their country. In January 2009 the Zimbawe 100 trillion dollar note on the left was worth about $300. It quickly fell to zero. Our creditors know the danger the US is in. That is why Moody’s has warned the US about an impending credit downgrade.

The problem with the number trillion is that the general public has no clue what one trillion means. Most think that it is similar to billion. After all, they rhyme. In other words, one million, then a billion is bigger, then a trillion is bigger yet. Such a naive understanding makes the public easy fodder for a Congress hungry to feed on citizens’ ignorance.

Here is one way to think of our debt:

If you were born when Christ was born and you went to your dad and wanted an allowance. He says, ”Son, I need you to have some decent spending money. I have a feeling you are going to live a long time. So here is $12 million. Spend it today, then come back tomorrow, and I will give you another $12 million. And I will do it every single day as long as you live.” And you spend $12 million every day from the time of Christ until now. You still wouldn’t have spent $12 trillion.

Or how about the picture below. We contacted Tim Geithner to borrow some currency for our photo studio but he declined our call. So we borrowed an image of one trillion dollars in $100 bills, which was computer generated by the folks at Gizmodo.com Then we stacked it 12 times.

A trillion here, a trillion there, pretty soon you're talking about real money.

How about a video, from a few months ago when we only owed $10 Trillion:

Do you get it yet? We’re in big trouble, and it is getting worse by the second (look at our clock at the right). Don’t feel bad if you don’t understand it. You’ll have plenty of time to get used to it. By then Congress will be spending quadrillions. Of course our currency will be completely worthless. We’ll also probably be speaking Zimbawe-ese. Or more likely, Mandarin.

We may all be singing in green tights

XINHUA: Today’s news from Xinhuanet.com calls attention to yesterday’s warning from the credit rating giant Moody’s that the US is in danger of losing its Aaa credit rating.

This report comes out on the same day Christina Romer, Chairwoman of the President’s Council of Economic Advisers testifies before Congress that the Stimulus Package is a failure. We expect Congress to take her testimony as a call to pass Stimulus II, more of the same. (We report on her testimony here.)

It is appropriate that we use XINHUA as our dateline since the Chinese are our biggest creditors. Did our reckless administration and Congress think that they could spend our way into oblivion and the Chinese wouldn’t notice?

Steven Hess, Moody’s lead analyst for the United States, said in a TV interview that the Aaa rating of the United States is “not guaranteed.” He said if the U.S. deficit does not drop to a sustainable level in the next three to four years, the U.S. rating will be “in jeopardy.” Xinhua News Agency

Just last year Moody’s warned the downgrade could occur in 8-10 years. It appears they are moving up the timetable due to Congress’ spending spree. And yet just the day before Moody’s announcement the Senate tries to pass another spending bill for 1/4 trillion dollars.

Tomorrow we are sure it will be business as usual, more talk of deficit spending, running up our bills with the Chinese. Pretty soon the Chinese will yank our credit card, which will lead to the collapse of our currency and way of life. That may just be what the Alinsky-Cloward-Piven crowd in this administration want.