Here are two articles that appear on the same day that should send shivers up your spine. First, the outlook on the credit worthiness of the United States is being more and more diminished. Soon, we will see the actual US rating lowered. This will send shock waves around the world since the United States has been seen as a stable and sure investment for decades. When this fantasy is finally seen as what it is, investors will shed US bonds and notes making it more difficult and expensive to fund the activities we have not been able to afford for over thirty years.
Equally concerning is the loud drumbeat coming from our enemy, China. They have been implying for some time that they would prefer to see a different currency be the world's standard other than the dollar. Now they are indicating they may need to divest some of their loans to the United States. Smart move on their part since investments in the US are becoming less safe, but it is bad news to the West. We need to wake up and stop sending our money to our enemies in the Far East and Middle East. The USSR fell from within. The United States is not immune to the same thing while getting assistance to that end from those who want our money on one hand, but would like to see our destruction on the other.
Stocks fall as U.S. credit rating outlook lowered to 'negative' by Standard & Poor's [Updated] | Money & Company | Los Angeles Times: "The credit rating agency Standard & Poor's lowered the outlook on the United States' credit to 'negative,' sending leading stock indexes down in early trading.
The report released Monday morning says that the United States has a large debt and deficit compared with other highly rated nations, and unlike with those other nations 'the path to addressing [the debt and deficit] is not clear to us.'China Must Cut Foreign-Exchange Reserves, PBOC’s Zhou Says - Bloomberg: "“Foreign-exchange reserves have exceeded the reasonable levels that we actually need,” Zhou said. “The rapid increase in reserves may have led to excessive liquidity and has exerted significant sterilization pressure. If the government doesn’t strike the right balance with its policies, the build-up could cause big risks,” he said, without elaborating...
Lending Spree
The nation’s currency holdings jumped by the second-biggest amount on record in the January to March period, even as the nation reported its first quarterly trade deficit in seven years. Economists attributed much of the increase to capital inflows betting on appreciation of the yuan.
