The "Can" Stops Here

13 Marcheshvan 5774

Government Creating Phony Crisis So They Can Pretend To Save Us

Peter Schiff: "...When our creditors realize how broke we are, they're going to impose a lending ceiling and we can't raise that. And that's when we'll have a real meltdown here in the United States."

The politicians may have overplayed their hand this time.  I think America's main creditor just woke up to the real possibility of default.

Chinese agency downgrades US credit rating

AFP - A Chinese ratings agency downgraded its US sovereign credit rating Thursday despite Washington's resolution of the debt ceiling deadlock, warning that fundamentals for a potential default remained "unchanged

China To Unleash The Worst Nightmare For The US

On the heels of Washington desperately moving to buy more time to deal with its financial crisis, today Canadian legend John Ing warned King World News that China is preparing to unleash the “worst nightmare” for the United States. Ing, who has been in the business for 43 years, also stated that the Chinese are about to make a “major move” which will enable the timetable for this “nightmare” to be greatly accelerated.

Ing: “Washington kicking the can down the road doesn’t solve the debt problem. Apparently this process has been so fun they are going to do it all over again, and the markets are getting pretty jaundiced about it. But standing back, the fact is that the US debt is still escalating....

...the Chinese have not been idle while the debt discussions have been unfolding. As an example, the Chinese have recently signed a deal in the UK that allows for the renminbi to be converted into pounds. This is something like 24 countries now which are now on board with China’s currency. The bottom line is the Chinese are slowly and quietly making the renminbi convertible.

The next major move for the Chinese is they will allow for their big state-owned companies to buy other companies. That’s a good way for them to unload their foreign exchange reserves, particularly dollar reserves. When that happens, Eric, we will see the first competitive currency against the US dollar, which up to now has held the preeminent position as the world’s reserve currency since 1944.

This process by the Chinese to unseat the US dollar as the supreme currency has recently been accelerated because of concerns about the recent chaos in Washington. You also have Russia now pushing for an alternative reserve currency. So this international movement for an alternative reserve currency is now unfolding in a major way, and it will have incredibly dramatic ramifications for the United States in the future.

...I would just add that 15 years ago the Chinese renminbi was not even on the radar screen of foreign currency traders. Today it is one of the top ten currencies traded in the world, and the Chinese are quickly setting the stage for the renminbi to become the United States’ worst nightmare as they aggressively position their currency to eventually unseat the dollar from its position of global supremacy.”

The rest of the world is not fooled either. Congress just kicked the can a bit further down the road, but the end of it is in sight.  At best, they've bought themselves a few more weeks.  The one-third of the country on government assistance might still eke out a little holiday cheer for their families, but when the SHTF it will be the dead of winter in America.

Dollar slides as relief at U.S. debt deal fades

LONDON (Reuters) - The dollar fell and Wall Street was expected to weaken on Thursday as relief over a U.S. budget deal gave way to worries over the effects of the 16-day government shutdown and prospects of a re-run early next year.

The legislation signed overnight by President Barack Obama to fund the government until January 15 and extend a debt ceiling deadline to February 7 did nothing to resolve the differences over spending and deficits that divide Republicans and Democrats.

"The U.S. can give a sigh of relief for now but the New Year could bring a dangerous sense of déjà vu," Luke Bartholomew, investment analyst at Aberdeen Asset Management, said.

Equity markets in the U.S. and Asia initially welcomed the last-minute deal which pulled the world's biggest economy back from the brink of a historic default, but the rally ran out of steam as the longer-term implications sank in.