May 02, 2011 – The price of gold bullion has broken away and it appears to be heading straightaway to $1600. A popular but begrudging mainstream projection was that the price would hit that figure only by year’s end. But they were still betting on the greenback.
For a while the Fed got away with its tricks buoyed only by its credit rating, which never budged from AAA/Aaa. Now at last Weiss Ratings has taken the big three sovereign ratings services to task with its far more realistic evaluation of the debt of 47 top economies.
Weiss Ratings, which covers 19,000 U.S. banks, credit unions and insurance companies, was formed to provide unbiased protection to consumers and investors from financial risks and their ratings have “been recognized by the U.S. Government Accountability Office (GAO), the U.S. Senate, the U.S. House of Representatives, and the financial media.”
To fill a “similar void in the realm of sovereign nations, along with an urgent need to unambiguously warn the public of growing risks, Weiss recently introduce the Weiss Sovereign Debt Ratings. The USA ranks 33rd on the Weiss scale with a grade of C; “Even the government finances of the Philippines, Indonesia, Bulgaria, and Mexico are stronger than ours,” says the founder of the service, Martin Weiss. “The C rating signals that the current fiscal condition of the United States government is far inferior to that implied by its AAA/Aaa rating.”
The USA “ranks 44th in terms of its debt burden … 32nd for international stability … and 27th for economic health.” It is only because the USA “ranks 6th for its ability to borrow in the global marketplace” that our final grade was not much lower.
The failure of mainstream sovereign ratings agencies to accurately assess the condition of the US economy has cost us plenty. It allowed the Fed to take us down this very dangerous path and it fostered the political gridlock in Washington. If we had been accurately rated years ago it would have made it far easier to take preemptive remedial steps. And the artificially high rating created a false sense of security and “chronic public complacency.”
A Weiss grade of C means there is still time to turn things around. I have my doubts about that because the status quo is certain to kill the messenger. But the word is out and it comes as no surprise.
The tangled web is unraveling, and the move is on to the shelter of gold bullion investments.
Jonathan Monroe
Senior Staff Writer - Gold-Bullion.org
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