So another “sinister plan” is unfolding before our eyes though I am not sure everyone sees it quite yet. Before we get to part 2 of this tragedy, let’s visit part 1.From approximately 2004 to late 2007 there was a tremendous buying frenzy in the housing market. People who should not have been getting loans were getting them easily. Banks were taking those loans and selling them in “tranches”, or many loans bundled together, and collectively they were known as Credit Default Swaps (CDS).
These CDS were traded between investors, from banks to hedge funds to teacher’s retirement funds. Many investors are required to invest only in safe investments. For example, the teacher’s union would not want to invest in anything volatile. They just want slow but continued growth.
To help insure the safety of these investments we have ratings agencies, inluding Moody’s and Standard and Poors (S&P). These rating agencecies would compete against each other for the business of banks. They were paid to rate these CDS. And a huge majority of the time these mortgage bundles were given a AAA rating, the highest possible rating.
So what does a rating do? It creates a “sentiment”. People believe the investment is safe because a rating agency said so. Had the proper rating been given in the first place, fewer CDS would have been purchased, and fewer loans would have been made to risky borrowers. Moody’s and Standard and Poors got it all wrong, but during that time billionaires were created while the future of many in the middle class were imperiled.
Now we come to Economic Vigilantes Part 2. While Greece is involved in the “tragedy”, it is a tragedy that will involve nearly the entire World. Once again, a ratings agency is at the center, namely Standard and Poors. They are doing their “Dr. Evil” detroy the World plan this time by creating sentiment though their (bogus) ratings.
When people are led to believe that a country or entity is not economically sound, they tend to take actions that bring about that very thing - unsoundness. We are not far from the tipping point of seeing some governments start to default on their debt. Those countries could include Greece, Portugal, Ireland, Italy and Spain. Over in the USA, we are likely to see downgrades by S&P on local governments, and we have already seen a downgrade on the USA itself.
Just like Economic Vigilantes Part 1, the rating agency (S&P) is being used as a tool to pillage large amounts of money from the middle class. They have been paying money into their respective governments for years through taxes and other levees, and now their governments are either going to default or pay massively high interest rates because the ratings agencies said they should.
Here in the USA, the largest investors continue to be able to borrow as a super low interest rate, and then they can take that money and loan it to consumers and poorly rated governments at a massive premium, all paid for by the middle class.
It’s time for people to see what is going on. I may not have correctly identified every detail of this new scheme, but I’m sure I’m not far off.
Oh, and the S&P claimed the reason for their downgrade is the US government didn’t cut deep enough. I would have to say part of the goal is to weaken government further as they prepare for Economic Vigilantes Part 3. Remember all these cuts represent a subtraction from GDP at a time we are desperate to grow and create jobs.
Best wishes to all! I know this sounds bleak, but the truth will set us free one day soon.