No doubt you’ve already read elsewhere that Standard & Poor’s has elected to downgrade the debt rating of the United States. That’s relatively clear-cut; no charade there. The charade I refer to is the rumored hand-wringing, back-and-forth drama between S&P and the White House, as reported throughout the afternoon by CNN, the Wall Street Journal, etc.
CNN does a good job of capturing and summarizing the hoopla here. I quote: “On Friday afternoon, hours before S&P publicly announced the downgrade, the agency revealed its plans to the Obama administration and sent an analysis to the Treasury Department. The senior administration official said the analysis inflated U.S. deficits by $2 trillion.
“Treasury analysts contacted S&P and challenged the analysis, and S&P acknowledged the mistake, the official said. But S&P said it still would stick with its decision to downgrade the United States’ credit rating, according to the official.
“This is a facts-be-damned decision,” the senior official said. “Their analysis was way off, but they wouldn’t budge.”
“The official the administration can do nothing now but hope that S&P’s decision and analysis faces outside scrutiny. (sic)
“These guys make Congress look good,” the official said of S&P.”
You get the idea. Couldn’t possibly be the tip-off that took a market that was down more than 200 away from the bearish “flight to safety” and into a closing rally back into positive territory and riskier, less liquid equities? Could it? Nah, that just all made sense on the heels of a 512-point drop the day before.
Again, we find indicators pointing toward efforts to accelerate removal of the USD from its official role of primary global reserve currency. Let’s read a bit of Bloomberg’s coverage of the debt downgrade: “The committee of bond dealers and investors that advises the U.S. Treasury said the dollar’s status as the world’s reserve currency “appears to be slipping” in quarterly feedback presented to the government on Aug. 3. The U.S. currency’s portion of global currency reserves dropped to 60.7 percent in the period ended March 31, from a peak of 72.7 percent in 2001, International Monetary Fund data show.
“The idea of a reserve currency is that it is built on strength, not typically that it is ‘best among poor choices’,” page 35 of the presentation made by one member of the Treasury Borrowing Advisory Committee, which includes representatives from firms ranging from Goldman Sachs Group Inc. to Pimco. “The fact that there are not currently viable alternatives to the U.S. dollar is a hollow victory and perhaps portends a deteriorating fate.”
Members of the TBAC, as the committee is known, which met Aug. 2 in Washington, also discussed the implications of a downgrade of the U.S. sovereign credit rating. “None of the members thought that a downgrade was imminent,” according to minutes of the meeting released by the Treasury. So the dudes from Goldman and Pimco et al didn’t even see it coming this soon.
And Treasury Secretary Geithner said as recently as April that there is “no risk” of a U.S. debt downgrade. So, presumably, even Secretary Geithner didn’t see this coming.
Now, you’ve probably also read that Moody’s and Fitch Ratings announced Aug. 2 that the debt ceiling increase deal unveiled that day sufficed for them to leave their AAA rating of U.S. debt in place. What would make S&P differ in its decision from the one made by its industry peers? A $2 trillion error, as we’re asked to believe, or cooperation among Council on Foreign Relations members (Card-carrying members Geithner and S&P President Deven Sharma come to mind.) S&P has been telegraphing the downgrade threat longest and loudest, which is exactly what led me to look at S&P executive bios to see who might be working in tandem with Geithner toward some end or other, back when the barking about a debt downgrade began earlier this year. As always, the question to ask is “Who benefits?”
Looks to me like a benefit to anyone seeking a new global reserve currency. As a reminder, another CFR member, George Soros, stumped for replacement of the USD earlier this year via a conference un-ironically conducted at Bretton Woods, New Hampshire by his puppet Institute for New Economic Thinking.
Let’s close with a look at what’s being pimped currently on the home page of the globalist clubhouse known as the CFR: “Rising Fears of New Global Recession: A tumultuous week in global markets that saw major indexes plunge aroused concerns of a double-dip recession driven by U.S. economic lethargy and the European Union’s resurgent sovereign debt crisis.”
But of course this is just a math error or divergent opinion on the part of S&P; Geithner and Sharma couldn’t possibly be running plays together to use the impending, worsening U.S. and European debt crises to bring about a global reserve currency change more quickly, right?
I merely lay out the case for orchestration; consider it and decide for yourselves. But allow me to suggest: we’ve about 42 hours (as of this writing) before global spot markets for gold and silver re-open. Go to your most savvy local coin/bullion dealer tomorrow and make a small purchase – a couple silver eagles or junk Morgans, or a one-tenth ounce gold eagle – and see whether the mark-up over spot has grown since last you’ve bought. If spreads are growing (and the joint is jumping) Joe Main Street is beginning to feel the boil. Ratchet up the preps as TS rockets toward TF.
Class dismissed.
Anthony Schiano
a.k.a President Malthus