US to Default on Credit Aug. 2 - Even if Solution Found Today

Yesterday, Moody's and Standard & Poor's both threatened to downgrade the credit rating of the United States of America. The threat of an official downgrade resonates with the real-time unofficial downgrade that is already underway in the market for credit default swaps (CDS).

(To review: CDS are a kind of "default insurance." The buyer of a CDS is buying insurance against default by a specific issuer of debt, whether that be a company or a country. The greater the apparent likelihood of a default, the higher the price insurance. That's why the price of a Greek CDS is 1,000 times greater than the price of a Norwegian CDS.)

This extreme pricing difference is to be expected. In absolute numbers, the national annual deficits of Greece and Norway are identical. But while the Greeks are running a budget deficit equal to about 14% of its GDP, the Norwegians are running a budget surplus equal to about 14% of GDP. Greece might default tomorrow. Norway is unlikely to default any time this century... or at least not until its North Sea oil runs out.

Interestingly, the price of 5-year CDS on US debt is also higher than that of Norwegian CDS. Both issuers are rated AAA. And not so long ago, CDS prices on both of these sovereign borrowers were identical. For a short while, in fact, Norwegian CDS were more expensive than their US counterparts. But the spread between the two has been widening out during the last several months. In other words, US CDS prices are rising relative to Norwegian CDS.

As of this morning, US CDS are more expensive than the CDS of six other AAA-rated sovereign borrowers. According to CDS buyers, the United States is less secure and deserving of its AAA rating than..... Norway, Sweden, Switzerland, Finland, Netherlands and Germany.

Counterintuitively, despite the threat of downgrades and the rising price's of CDS, demand for long-dated Treasury bonds has some unknown hidden support at the moment and appears to be OK....... no doubt from more fake printed money made out of thin air... so it is not real.  In entertainment terms it is called magic..... watch..... my hands never left my wrists!

But the fact that this is happening at all shows that ......... 1. America has an enormous debt problem. 2. appears to have low resolve at dealing with it and 3. "That's why the world has made gold and silver."


1 comment:

  1. Why you might ask?

    PS: With Europe in a mess of bailouts the Euro under attack, and major Euro banks failing stress tests. The simultaneous default of the US dollar would make this is an opportune time for ...... the secret (Builderberg /Illuminadi/ House of Windsor/ Federal Reserve/ Rothschild Group of Free Masons) coalition to destroy credibility of both currencies in favour of their new IMF sponsored "Amero" currency. WHY?

    This group of ruthless bankers wants to maintain control of the world and its currency and the US Dollar was under threat from the BRIC countries (Brazil, Russia, India and China) With their combined GDP's over running the US to threaten the green back.

    Let's face it, "the people" are "useless eaters" to these merciless mega wealthy power houses which comprise only 4% of the world population but own and control 60% of it's wealth. That leaves the rest of the 96% of us humans to live off of the remaining 40% of wealth. But these mega wealthy people own the large farm and food corporations, so guess what comes next? Food shortages world wide within 3 months from now.

    I call it as I see it. The 911 conspiracy..... The US dollar demise fabricated by Free Mason Obama - his unrealistic demands on the house - no way will these get met totally unrealistic demands, thus ensuring the US misses the August 2 deadline. The undermined Euro caused by the European Free Mason managed European Economic Committee in control of the Euro.

    Get some physical gold and silver now. Stock an extra supply of food now as the cost of it will double and triple and more. There will be little income available as the Global economy stalls

    I really hope this does not come to pass. But it is happening right in front of us right now. You can't look to the media. They are owned by the powerful coalition above and will never give you the "heads up" you need to protect yourself. Don't believe this... right now Free Mason run Corporate pawn Goldman Sacks Corporation is shorting everything in sight except Gold/ Silver and Commodiies. You best do the same.