Moral Outrage
Whew! God help us!

Theory on why rating agencies are downgrading US debt

Some are of the opinion that the rating agencies are working with some of the predatory bankers and the hedge funds who are trading in these naked credit default swaps, and are targeting these economies and countries for failure, because they make more money on these insurances than they lose on their bond holdings.

We have seen that played out in Europe, and we have seen an earlier version of this played out in Latin America before the credit default swaps were invented.

And as far as the United States goes, it should be clear we are really talking $70 – $80 trillion of debt for America, not just the $14.3 trillion figure. You need to add into the American balance sheet the debts of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), and that’s another 5 trillion.

And when you add the unfunded reliabilities of Medicaid and Social Security, you add another 50 trillion.

When rating agencies downgraded debt in Greece, Ireland, and other countries, it was part of the cascading effect that we have seen in the collapsing of those economies.

[Excerpts from an interview with Max Keiser, journalist and broadcaster]

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