“Brace for Impact.” I have thought about this economic collapse title for months. I held onto it and figured I would know when the right time was to put it out there. Today is the day.
Watching mainstream media (MSM) this weekend, you would think a one notch downgrade to America’s debt doesn’t really matter. For example, former CNBC anchor Erin Burnett said Friday night on CNN the downgrade was “already priced into the market.” The panel spoke as if the first U.S. debt downgrade in history was no big deal. To that I say, positively absurd!
The gold market must think the same thing I do because when the Asian market opened, the price of the yellow metal shot up more than $27 an ounce, which is another all-time high. At around 1:30 am today it was up $50 and ounce another all-time high! I don’t know where gold will close in the U.S. market, but I think it is safe to say gold (and silver) prices are going much higher. On the other hand, stock prices are headed much lower. I’ll be shocked if the Dow doesn’t end 300 points lower today. I wonder if the Plunge Protection Team (aka the Presidents Working Group on Financial Markets) will step in front of this runaway locomotive.
China also thinks the U.S. debt downgrade is a big deal and a big negative future trend. CNBC reported yesterday, “The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating. In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.” (Click here for the complete CNBC story.)
There are those, this week, that said the downgrade of the U.S. credit rating will be a “wake-up call” for Washington politicians. Some pundits claim this might pull both parties together, get something done for the good of the country, and finally deal with the immense problem of debt spending and entitlements.
I think this will end up becoming a battle cry for both Democrats and Republicans in the 2012 election. Both are blaming one another for the downgrade. Yesterday on “Meet the Press,” Senator John Kerry (D) trotted out some new partisan language and called the S&P action on U.S. debt a, “Tea Party downgrade because a minority of people in the House of Representatives countered even the will of many Republicans in the United States Senate who were prepared to do a bigger deal.” Speaker of the House John Boehner (R) said this weekend, “Unfortunately, decades of reckless spending cannot be reversed immediately, especially when the Democrats who run Washington remain unwilling to make the tough choices required to put America on solid ground.”