S&P Downgrade – now will Congress and the President get serious?


Kneecap Alley in Northern Ireland 1986-1987

This was taken in a particularly dodgy area in West Belfast. The alley was known for the “kneecapping” of local offenders by the paramilitary group controlling the area. These soldiers are securing the area for the SOCO (Scene of Crime officer) after another ruffian was given some ruff justice the evening before.

Today’s S&P downgrade is a mild version of kneecapping. The Obama administration can downplay the S&P downgrade of U.S. debt all they want, but the market knows better.

The market doesn’t care whether we like Obama or not. Whether we like Republicans or not. Whether we like Democrats, unions, corporations. This is reality.

The initial 200+ point plunge in the Dow will probably recover a bit before the day is over — no doubt the PPT is working overtime right now. But gold is finally almost at $1500 per ounce. Silver is moving up even faster.

These are all market moves showing great lack of confidence in the government’s ability to keep from plunging over the same cliff that Greece, Ireland, Greece, and maybe even Iceland are going over right now.

Tax increases will push the train over the cliff even faster. With more money going to the government, less money will be spent on production, because producers will have to slow or stop production.

The problem is obvious and the solution is simple. The federal government is spending and borrowing too much money. Whether private or public, debt is not only money you don’t have, it is money you must get somehow to pay back or risk getting kneecapped.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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