by Martin D. Weiss, Ph.D.| Money & Markets
October 31, 2011
If you’re among those who think the central bankers and finance ministers of the world really have a clue about how to bail out bankrupt borrowers and end a debt crisis …
I urge you to take another look at what I wrote last week about the NINE MAJOR CRISES they’ve bungled in the past half century.
Each and every bailout plan bombed or, worse, set the stage for the next, even bigger debt crisis.
That’s why today’s sovereign debt disaster is threatening to crush the finances of the biggest governments in the West … sabotage any semblance of recovery … and trash the livelihood of hundreds of millions of people.
Plus, if you believe Europe’s new “master plan,” proposed last Wednesday, might have a chance of finally ending this granddaddy of debt crises …
I suggest you read what Mike Larson has just written about the THREE CRITICAL DISCONNECTS between hope and reality that could kill the rescues — not just in Europe, but also in the U.S.
Better yet, for a fair and objective assessment of how serious this crisis truly is, just look at our own sovereign debt ratings.
An historic, world-changing event is about to permanently alter your life!
This monumental event will plunge vast numbers of families into the nightmare of poverty, homelessness and hunger. In the worst case scenario, you will see soaring crime, the confiscation of property, the suspension of civil rights, and even martial law enforcement by the U.S. military …
Unlike Standard & Poor’s, Moody’s, and Fitch, we accept no compensation whatsoever from debt issuers for issuing a rating.
No, the credit rating agencies don’t get paid for their ratings on sovereign nations. But they do get paid big fees by thousands of commercial banks, investment banks, insurers, and other companies that depend on the governments for bailouts, subsidies, guarantees, and all kinds of contacts.
So when S&P, Moody’s, and Fitch downgrade the credit of entire countries, they also jeopardize the ratings — and the business — of their best-paying corporate customers domiciled in those countries.
This fundamental conflict of interest helps explain …
- Why S&P continues to give the U.S. government a stellar rating despite the most tragic deterioration in U.S. government finances of all time …
- Why Moody’s and Fitch continue to give it the highest possible grade, and …
- Why all three did not begin to seriously downgrade sinking European countries until long after their sovereign debt crises exploded onto the front pages.
This is also why we decided to take a series of actions to alert you to the impending disaster:
On May 10, 2010 — over 17 months ago — we challenged the major credit rating agencies to downgrade U.S. debt. (See “Weiss Ratings Challenges S&P, Moody’s and Fitch to Downgrade Long-Term U.S. Debt: Downgrade would help protect investors and prod Washington to fix its finances.”)
We published an open letter to the credit rating agencies, repeating the challenge and documenting FOUR CASE STUDIES of their failures to warn investors of obvious financial disasters.
On April 28 of this year, we became the first rating agency to issue a low grade on U.S. debt, rating it a C, or the approximate equivalent of BBB by S&P. Forbes later confirmed that Weiss Ratings beat S&P and all other rating agencies in alerting the public to the dangers. (See our press release here.)
On July 15, we downgraded U.S. government debt from C to C-, reflecting a continued deterioration in the U.S. government’s debt burdens, international accounts, and economic health. (See “Weiss Ratings Downgrades United States Debt to C-.”)
And just last month, we reaffirmed the C- rating for the U.S., while downgrading the debt of six European countries. (See press release.)
Here are the independent Weiss Sovereign Debt Ratings (last column) of the major countries in the news, compared to those of the three conflicted credit agencies:
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Sovereign Debt Ratings Compared
|
|
S&P
|
Moody’s
|
Fitch
|
Weiss
|
|
Belgium
|
AA+
|
Aa1
|
AA+
|
C-
|
|
France
|
AAA
|
Aaa
|
AAA
|
C
|
|
Germany
|
AAA
|
Aaa
|
AAA
|
C+
|
|
Greece
|
CC
|
Ca
|
CCC
|
E
|
|
Ireland
|
BBB+
|
Ba1
|
BBB+
|
D-
|
|
Italy
|
A
|
A2
|
A+
|
C-
|
|
Portugal
|
BBB-
|
Ba2
|
BBB-
|
D+
|
|
Spain
|
AA-
|
Aa2
|
AA-
|
D+
|
|
U.S.
|
AA+
|
Aaa
|
AAA
|
C
|
Continue reading →
The late Bob Chapman predicted it years ago. So does Paul Craig Roberts. It could “destroy Western civilization,” he believes.
You might remember Dr. Michael Burry as the hedge fund manager who made hundreds of millions of dollars betting on the collapse of the housing market. You, also, might remember everyone from the mainstream media (MSM) to the Federal Reserve claimed nobody could have seen the 2008 financial collapse coming. How did Dr. Burry know a financial catastrophe was on the way while most financial experts and media were totally in the dark? This year’s commencement address at UCLA’s Department of Economics was given by Dr. Burry, and he says, “The ignorance is willful.”
I hope everyone saw ex-Federal Deposit Insurance Corporation chief Sheila Bair’s 
The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.