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by Stephen Lendman
Monday, Aug. 08, 2011 at 4:55 AM
America's Cratering Economy - by Stephen Lendman
Slow-motion fiscal collapse perhaps explains its current state after decades of mismanagement, accelerated under Bush and Obama. The chickens are now coming home to roost big time, hitting ordinary people hardest, suffering under a protracted Main Street Depression. More on that below.
Last April 18, Standard & Poor (S & P) downgraded its rating on America to negative, saying:
S & P "affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the US. (It also) revised its outlook on the long-term rating of the US sovereign to negative from stable....(W)e now believe (US strengths may) not fully offset the credit risks over the next two years at the 'AAA' level...."
"More than two years after the beginning of the recent crisis, US policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures."
S & P analyst Nikola Swann added that from 2003 - 2008, US debt ranged from 2 - 5% of GDP. However, it ballooned to over 11% in 2009 "and has yet to recover."
Swann also warned of "a one in three chance that the US could lose its AAA rating in two years because of its mounting debt."
S & P's entire statement can be accessed through the following link:
Note: S & P and other major credit agencies partnered with Wall Street speculation and grand theft because they're paid by the companies they rate. In fact, Washington, too-big-to-fail banks, other FIRE industry (finance, insurance and real estate) giants, and major rating agencies were complicit in fueling the bubble economy and crash by design, not chance.
They're in league again now, targeting entitlements for privatization, so Wall Street can rip off recipients for big profits, leaving millions unable to comply with their rules high and dry, and those who do will be defrauded.
April 18 was step one. Follow-up came on August 5, saying:
"We have lowered our long-term sovereign credit rating on the United States of America to AA+ from AAA and affirmed the A-1+ short-term rating....The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."
"The outlook on the long-term rating is negative. We could lower the long-term rating to AA within two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case."
In other words, Wall Street wants deeper cuts, using S & P as its mouthpiece to demand them. Washington, in fact, needs this pressure to enact what's already planned - successive entitlement and other social benefit cuts until government no longer provides them. That's what this is all about.
The entire S & P statement can be accessed through the following link:
Note what economist Paul Craig Roberts told Press TV last April:
Without permission, "(i)f a rating agency actually reduced the credit rating of the US government, it would simply be arrested, tortured and put on trial as an aider and abettor of terrorism."
In other words, it can't happen without Washington's permission, following orders from Wall Street, running government operations their way, putting their people in key posts to direct everything financial going on.
Washington, in fact, is Wall Street/War Profiteers/Big Oil/and other favored corporations' occupied territory, along with the Israeli Lobby getting everything it wants for Israel, even when counterproductive to America.
In fact, these diabolical forces corrupted political Washington beyond repair. As a result, today's choice is either letting them have everything their way, destroying American and perhaps planet earth in the process, or ripping down the entire rotten-to-the-core system and starting over. There is no other alternative. It's too late.
Note also as a previous article explained:
Financial expert/investor safety advocate Martin Weiss downgraded US debt to C-, the equivalent of S&P's BBB- or one notch above junk, heading for it eventually.
In doing so, he said:
Regardless of the debt ceiling/budget debate charade outcome (since announced), "few will escape the far-reaching consequences of America's unfolding debt disaster."
As a result, he calls today's machinations "just a dress rehearsal for the true tragedy of a nation unable to end its own financial decline any more effectively than a Greece, Ireland, or Portugal."
Why? "Among the 49 sovereign nations Weiss Ratings covers, the US has one of the heaviest debt burdens, the weakest international reserves, and the least stable economy."
In addition, "America's largest banks have the greatest exposure to high risk derivatives - nearly 40% more today than during the debt crisis of 2008." They're a ticking time bomb waiting to explode anytime when least expected.
America's Economy: Heading for Eventual Collapse
On August 5, Boom, Doom and Gloom Report editor/publisher Marc Faber told CNBC that markets could rebound after August 4's rout, but ahead he sees total collapse, saying:
Massive money printing artificially boosts markets, postponing an eventual day of reckoning because deep-seated problems weren't fixed, just delayed for later when they're greater. As a result, the next "global economic crisis....will be much worse than 2008."
Ahead of it will be more money printing and war, he believes. "The whole system will collapse." It's baked in the cake and will happen. It's not if but when, how deep, protracted and destructive to billions globally, including millions of working Americans hammered hard.
Gluskin Sheff economist David Rosenberg provides important assessments of conditions. Commenting on the latest July employment report he said:
The primary private payrolls trend shows a slowing economy. "In fact, it is slowing fast, and, it is following a very similar pattern that occurred between three and eight months before the last four recessions."
The July report belies a disturbing trend, heading south faster than most analysts believe. The headline 117,000 jobs created was, in fact, 60,000 with the so-called "birth/death" ratio removed.
Moreover, the broader Household survey showed 38,000 jobs lost, "and is down now in three of the past four months, for a combined total of - 568,000."
In addition, U-3 unemployment falling to 9.1% resulted from 200,000 discouraged workers, dropping out in frustration for lack of jobs. Labor force participation also fell to 63.9%, its lowest level since May 1983, and the employment rate (employment/population ratio) dropped to 58.1%, "a 28-year low as well."
America's economy is in sickbay, getting sicker. "Forewarned is forearmed." Structural headwinds are everywhere.
Before long, establishment analysts will have to admit what Rosenberg and economists on the Progressive Radio News Hour warned about much earlier - that destructive government/Fed policies assure big trouble ahead, and the longer they continue, the worse off things will be. Count on it, and it'll be nasty when it arrives full-force.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.
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