Hidden Agenda of the SEC

I recently watched an interview where the guest said, “Don’t pay attention to what the Chinese are saying and pay attention to what they are doing”. The Chinese credit rating agency, Dagong, is an action not actually posturing. The Chinese have been trying to leverage themselves into a dominant global currency for some time now, unlike western countries; the Chinese are very patient (http://dennishodgson.blogspot.com/search/label/china).


The Dagong rating agency is being purposely kept under wraps. The SEC is a government agency that regulates publically traded companies for the US and the world. Since the US is where everyone wants to do business, we have a lot of foreign investors in the US, so in essence we regulate the world. In 2006 congress passed a reform bill because of the scandals on Wall Street with the collapse of the US housing market. If anyone has ever had to comply with any government regulation in the last few years, you would realize the amount of red tape and paper work required to comply.

I recently worked for a publicly traded company in the IT department. I spent 1 week of every month just putting together all the necessary paperwork required to be compliant with the Sarbanes Oxley act. This act strips all companies of their independence and also puts the government in a position to where if they were to do a hostile takeover, with the compliance regulations of SOX, they could run your company without anyone even noticing. Also, the SEC has the ability to seize assets of companies just for suspicion of wrong doing, put the assets in a Swiss bank account, and when your name is cleared give everything back to you after 5 years of investigation while keeping the interest gained over the 5 years. So, you can see my hostility towards the SEC, but I can also be unbiased to an extent.

If you were to ask the SEC about why they turned down the Dagong credit rating agency, they will tell you that “…because the agency said it couldn’t reliably ensure that the Beijing company would comply with U.S. reporting rules.” What measure did they use to determine this? I think this could be major politicizing because of the threat that Dagong poses to the big 3 ratings agencies and the US. The Dagong Company threatens to change the way things are done in the US and in the Bond Market.

If you ask the Dagong company why they were denied they would tell you that China’s regulatory agencies are willing to resolve any cross border dispute the US has because China’s regulatory agencies do not see this as a violation of national sovereignty, The US has never tried to resolve any cross border regulatory dispute, and that they were willing to follow SEC regulations. Dagong has also cited that the US has asked to enter the Chinese market, which they were allowed to, and have occupied 2/3 of the Chinese market.

I see both sides politicizing this issue to its fullest extent. The US would have to admit fault in their rating system if they let the Dagong Company in and China is whining, with some good reason, about not being able to receive equal treatment in their eyes.

So, what’s really going on here? China is making an action to reform the way the globe does its ratings of countries. What does this mean for the US? We would lose our AAA credit rating, this would force us to be responsible, and this could give emerging countries a hand up on the US. Currently the big 3 S&P, Flitch, and Moody’s are the dominant ratings agencies in the world. The way they rate countries is on borrowing ability. With the US having the largest economy in the world we would have to have a major recession worse than the great depression in order to be downgraded. On the other hand the Dagong Company wants to change the game by rating countries based upon income to debt along with other factors, but income to debt is the main change here. With the US reaching now 94% debt to GDP this would slow down our borrowing ability and possibly shut down the government. In other words we would have a hard time paying our bills without the Fed doing QE1 and QE2 type of lending. This would force us to monetize our debt and possibly collapse our system. This isn’t all doom and gloom though. With an A+ rating we’re still in decent shape, but we’d be paying a higher interest rate on loans which would cause us not to borrow as much which would cause us to start becoming more fiscally responsible. On the other hand if we don’t heed these warning by our credit rating dropping then we’ll continue on our destructive path and eventually the gravy train will be over.

The likelihood of the Dagong company becoming globally recognized is close to nil. As far as our credit rating, we have nothing to worry about. What about the long term effects though? If the big 3 refuse to hold the US accountable or change the way they rate countries we’re definitely heading down the road to self-destruction. A friend I’ve been talking to said that China has a completely untapped market inside their country. If the Chinese decide to pull out of the global market as much as possible and just develop within their country, this could be bad for business here in the US. China could very well become the biggest economy in the world due to the sheer population, but this would take at least one generation to do. There’s really no telling what could happen except that US consumers would be competing with Chinese consumers to be able to sustain the lifestyle we currently have.

In conclusion, I would say the SEC made a big mistake in refusing the Chinese Dagong credit rating agency. Either the SEC is a bunch of elitist government officials or they did the right thing, but we may never know for sure. I will say that although China is a Communist country, they have a good idea and would possibly reduce the risk of global catastrophe. Right now the US is heading down a bad path and could very well end up on its head because those agencies entrusted to keep us safe and secure are actually causing the problem. This is just another thing to think about and say, maybe we should really look at this. It is always in China’s best interest for the US to remain the global exchange currency and to have a strong dollar because they reap the benefits of jobs and an export surplus, so don’t always think that they are our enemy, they are acting in their best interest which at this point happens to be our best interest as well.

Sources:

http://blogs.wsj.com/marketbeat/2010/11/11/chinese-rater-us-downgrade-us-as-creditworthy-as-costco/

http://www.youtube.com/watch?v=UDRZRSZ7GX4

http://dailyreckoning.com/chinas-dagong-credit-rating-agency-steamed-over-nrsro-delay/

http://finance.fortune.cnn.com/2010/07/28/chinas-dagong-says-u-s-rejects-it/

http://www.dagongcredit.com/dagongweb/english/pr/show.php?id=78&table=web_e_zxzx  http://en.wikipedia.org/wiki/Nationally_Recognized_Statistical_Rating_Organization#Credit_Rating_Agency_Reform_Act_of_2006

http://www.sec.gov/rules/final/2007/34-55857.pdf

http://www.zerohedge.com/article/sec-denies-chinas-dagong-market-entry-after-us-debt-downgrade

http://www.sec.gov/litigation/opinions/2010/34-62968.pdf

The shot never heard 'round the world

I think we have a new shot heard around the world, but it’s being silenced so that everyone will keep confidence. There’s a story that has been pushed to the back page and bottom of the pile. You would have to really search or like I did stumble upon it. In my article “Federal Reserve Bankrupting America” you will see the beginning. In 1997 China created its own global credit rating agency called the Dagong. Since China is an emerging power and smart investor, they needed a system that would put their views to the world out in the open.


On July 13th of this year Reuters reported that the Chinese Dagong credit rating agency downgraded the US credit rating from AAA to AA. Since the Dagong is not globally recognized as a credit rating agency this was pushed to the back of the news. No one in the news reported this or even made mention of this. Not even Wall Street has paid attention to this.

In September of this year the Chinese Dagong credit rating agency applied to the SEC to become a globally recognized credit rating agency. The SEC due to regulation created as soon as the Democrats came into power in 2007, the Dagong was denied entry. This is where I start to smell a rat. The big 3 credit rating agencies still give the US dollar an AAA rating although the Chinese and the rest of the world are starting to lose confidence, especially after we’ve spent almost $6 trillion in the last 4 years under the Pelosi Speakership. The rest of the world has been warning us for some time that our debt is undermining the value of the US Dollar. The biggest red flag for me is that the big 3 credit rating agencies Moody’s, S&P, and Fitch still keep the US credit rating at AAA. Is there a reason for this, and what are the regulations that are preventing a major and emerging global lender from having any real input in the world market as far as credit ratings?

On November 9th of this year the Chinese Dagong credit rating agency lowered the US credit rating again from AA to A+. Have we heard anything about this, the answer is no. Will we hear about this, the answer is still no. Is the rest of the world paying attention, probably not. This rating change could be seen as political in nature considering the US has been devaluing the dollar to force revaluation of the Chinese Yuen. This could also be the signal to the US that we need to start paying off our debt and really acting like a responsible adult instead of a spoiled kid with an endless credit card.

As long as the Dagong credit rating agency is being kept under wraps we’re just heading towards another bubble. Could this bubble be the straw that breaks the camel’s back? Although the big 3 are telling the rest of the world that the US dollar is strong, this could be disastrous. China’s Dagong may actually be a fair credit rating agency, although it is being controlled somewhat by the state. The Chinese are a different culture than the rest of the world, so we just don’t understand that Chinese investors are more likely to listen to the Dagong credit rating agency before they listen to any US based credit rating agency. This could very well be what Glenn Beck was talking about when he said “China may stop buying US Bonds” on his November 5th show on FNC. If the Chinese investor decides to follow the Dagong credit ratings instead of the big 3 given to us by a US government agency the SEC, this could very well get ugly soon. If the US does not heed these warnings we are at the peak of a very ugly road.

My final thoughts will be short and simple. There’s a rat, I can smell it. Why does the Federal government get to use double standards on everything? We complain about the Chinese undervaluing their currency, but then we do something like QE2? Why do we get to choose who we recognize to rate our credit and use a government agency to prop up a failing dollar, but we refuse to acknowledge the truth. This is just the tip of the iceberg. I will be researching the rest of the weekend and come out with an expose on these regulations that favor the US and could possibly be our demise and I also want to know why the Degong has lowered the US credit ratings to see what other motives there are. I personally think that they’re right on target, but there could be more to it. Please tune in on Monday and I will have even more information to this big puzzle while we watch our dollar collapse.



Sources:

http://online.wsj.com/article/SB10001424052748704082104575515470951666514.html

http://ftalphaville.ft.com/blog/2010/09/27/353781/dagong-fires-back/

http://seekingalpha.com/instablog/679135-sun-kai/84377-china-s-new-credit-rating-agency-trouble-for-the-big-three

http://www.bloomberg.com/news/2010-11-09/china-s-dagong-downgrades-u-s-to-a-on-quantitative-easing-xinhua-says.html

Game Over America

**Blogger’s Note: Exploring this topic has been difficult for me. My family has always been the defenders and the backbone of this country. I come from 10 generations of military as well as middle class business-people. While one side of my family was helping to create a strong economy, another part was fighting for the freedoms and rights that our country needed and deserved. Doing this research has made me feel that we’ve been fighting and growing for nothing. All of the effort put into this country seems to have been disregarded and unappreciated. All it took was a handful of people to get into power and decide they wanted to destroy our country as we know and love it. I’d like to ask you to do your own research on this subject. If your research contradicts mine, I would love to see it. I think everyone needs to research these topics for themselves and find the information. If you love your country as much as I do, it may be a pretty painful experience, but I guarantee you, it is necessary. My sources at the bottom will be a great starting point for your own personal research.**

Recently Glenn Beck did a segment on the 15 day path to the New World Order. Either he didn’t paint a big enough picture, or he’s just plain wrong. I decided to look for the answers myself and what I found was kind of scary. I’m waiting for the Wallstreet Journal to finally publish this so that we can start rebuilding because right now, we’ve reached the end of our rope about $600 billion ago (http://www.usdebtclock.org/). First let’s answer the question that Glenn Beck stated may be the downfall of the Republic, which is will China stop buying US Bonds.

The simple answer is that China won’t stop buying US Bonds unless a couple of things happen. First of which would be that the US Dollar is no longer the global exchange currency. Secondly, China would have to be the global exchange currency which would mean that the Euro and US Dollar have collapsed. Lastly, America would have to collapse internally from such an overwhelming debt that the inflation over values the Chinese RMB. These are possibilities, but I doubt that this will happen in these ways from the research I’ve done.

Recently America has been accused of implementing the same currency warfare towards the rest of the world like when the stock market crashed in 1929. The world relies on the dollar being the global currency and is a very delicate system of checks and balances. With the US being the current exchange currency this gives us a lot of clout, but the policies of the Pelosi Congress and Obama Presidency have put the whole country at risk, even Hillary Clinton has admitted this.

The way this works is that the US dollar is the bench mark currency. The countries who have lower value currencies tend to have a trade surplus like China, Japan, and Germany. Those countries with higher currency values tend to have a trade deficit like the US and Greece. Currently the US makes up 40% of the world’s total trade deficit with China leading the way with the largest trade surplus at 23% and Japan runs somewhere around 21% and Germany around 19%. These nations in order to keep their trade surplus. which means jobs and development, keep their currency lower than the dollar because it makes their products cheaper to buy. As the US waters down its dollar by borrowing and doing things like QE2 this lowers the value of the dollar making purchases from China, Japan, and Germany more expensive. This in turn sends them into a recession because they rely on the US to be large importers of goods. If the US were to devalue its currency so low that it would match the Chinese RMB this would come close to collapsing the global economy.

There’s a few scenarios that are more realistic that could happen before Glenn Beck’s China refusing to purchase US Bonds scenario works.

Scenario 1:

With the US debt to GDP level reaching 100% by the end of 2010 we could see a new policy. The fed has already started to implement this by doing QE2. Congress could or could not raise the debt ceiling, but this really doesn’t matter at this point. Fed Chairman Bernanke has publicly stated that he’s not subject to the Congressional debt ceiling nor does he have to worry about having to be an elected official. This makes the Federal Reserve a rogue and destructive element in every scenario. The Federal Reserve can print money devaluing our currency as it pleasse because it has no real oversight. This would cause massive inflation and devaluing of our currency. No one in their right mind would want to invest in the US Dollar because it’s worthless. Our economy collapses, the rest of the world’s economy collapses, and a new global currency emerges.

Scenario 2:

China is currently trying to head off the currency wars by maneuvering to become the new world currency or global exchange currency. I have read an article that stated that China is giving discounts to nations that are willing to use the RMB instead of the US Dollar. They would still have to get the US to accept this, but since they own so much of our foreign debt and we’ve made promises, China could very easily twist our arm very hard in a post Obama Presidency or just politely ask the current Obama Presidency to get this done. The downfall of this would be that with China having such a large trade surplus and the US having such a large trade deficit that this would collapse the world economy. The upside to this is we might get bailed out like Greece, but be prepared for riots in the streets by union members because they lost their pensions.

Scenario 3:

With the value of the dollar dropping so rapidly and the inflation causing the cost of comodoties to go up this could give us a double dip recession that we may not be able to dig ourselves out of. If the US dollar collapses and the Euro being so weak and the US being 40% of the worlds trade deficits this could still lead us into a global catastrophy. This would open the door to a global currency and even possibly a global government because the general public of the world would sacrifice liberty in exchange for security like the US has currently shown it is willing to do just like after 9/11.

Scenario 4:

People like Glenn Beck and ultra conservatives could force the Federal Reserve to show them their books. By showing their books there is a possibility that the Federal Reserve could show at minimum double the amount that they have printed. This would cause such a major amount of hyperinflation that the American economy could collapse, the Euro could collapse, and then the Chinese could have a total collapse of their economy and create such a global catastrophy that would put us in the “Dark Ages”.

The bottom line with all these scenarios is that the US is devaluing its dollar so much that it is risking the collapse of the US economy which in turn will create a domino effect for the rest of the world because we are so intertwined. We will recover in due time, but we might see the dawning of another “Dark Age” for the world. Will this be equivalent to the world rebuilding itself from the ashes?

I watched a documentary on the History Channel about the “Dark Ages”. I was so upset by it I had a hard time finishing it. Once barbarians conquered the capital city of Rome’s Western half the world was sent into the “Dark Ages”. Barbarians in all corners of the old western empire were jockeying for domination. The world only knew one world power, Rome, and so they figured they would conquer as much as they could to create their vision of world domination. Unfortunately the “common man” was stuck in the middle of this. Technology, arts, and many other vital civilization evolutions were put on hold just to be able to whether the turbulent times. Once there was order, a new barbarian leader rose to conquer the stabilized society. This could very well be what happens here in the US and worldwide if we keep going in the direction that we’re going in.

In conclusion, the US Dollar is so devalued that over the next several months inflation will set in. Companies like General Meals and McDonalds are already stating that the commodities that they use to make their products are more expensive than what they are charging in the market causing them to raise prices. Once inflation sets in we should expect to see the double dip recession that some people have talked about. Once in the double dip recession we’ll continue to borrow because the Federal Government will want to give some sort of stability. One of two things could happen. We could have another civil war because of the imminent collapse of the dollar or we finally wake up and dig ourselves out of this problem. I think civil war will end up being the way we go because American’s have shown they just don’t care anymore. As my wife says “American’s just don’t stick to things and see them through anymore”, so the easy way out would be civil war. We have the potential to really send civilization back as much as a 100 years if any one of the 4 scenarios play out. The question is starting to become not “if” but “when” our economy collapses because Pelosi and Obama have singlehandeldly spent up to $6 trillion over 4 years which is almost a 50% drop in the value of our currency in just a short period of time.



Sources:

http://www.businessinsider.com/henry-blodget-china-terrified-us-will-default-on-debt-2009-3
http://www.nakedcapitalism.com/2009/01/ny-times-china-cooling-on-us-debt.html
http://www.guardian.co.uk/business/2010/may/27/stock-markets-buoyed-china-eurozone-debt

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=7081
http://www.bcheights.com/marketplace/china-refuses-to-revalue-currency-despite-intense-u-s-pressure-1.1124754
http://wpblog.ohpinion.com/2010/09/25/u-s-going-beyond-polite-requests-to-get-action-on-yuan-revaluation/
http://www.brookings.edu/opinions/2010/0222_china_debt_burtless.aspx
http://www.cbsnews.com/8301-503983_162-4864398-503983.html
http://hubpages.com/hub/Why-is-China-so-Important-to-the-US-Economy
http://www.marketoracle.co.uk/Article21510.html

http://mpettis.com/2010/05/don%E2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
http://mpettis.com/2010/05/don%E2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
http://www.marketoracle.co.uk/Article21058.html
http://www.wsws.org/articles/2010/nov2010/pers-n05.shtml
http://weakonomics.com/2010/02/01/what-happens-if-congress-doesn%E2%80%99t-raise-the-debt-ceiling/
http://patriotsforamerica.ning.com/forum/topics/what-happens-if-the-gop
http://www.tradingonlinemarkets.com/Articles/Economics/debt_to_gdp_ratio.htm
http://www.nuwireinvestor.com/articles/what-happens-if-the-yuan-replaces-the-dollar-as-the-53636.aspx
http://economics.about.com/od/foreigntrade/a/trade_deficit_h.htm
http://epi.3cdn.net/28e51781e452fee9d9_3um6ii54c.pdf
http://mediamatters.org/print/research/201010190002
http://www.wnd.com/?pageId=114759
http://www.naturalnews.com/030309_food_inflation.html
http://www.naturalnews.com/food.html
http://inflation.us/foodpriceprojections.pdf
http://www.independentlivingnews.com/pdf/Final_days_of_dollar.pdf?utm_source=Publicaster&utm_medium=email&utm_campaign=1008%20-%20Initial%20Welcome%20Email%20-%20FDoF%20Survey&utm_term=The+Final+Days+of+the+Dollar%3a+10+Last-Minute+Preparations+You+Need+to+Make+Now&AID=2334
http://www.youtube.com/watch?v=4ljqUXVbZR0
http://www.doughroller.net/news-analysis/food-prices-are-soaring-everywhere/
http://online.wsj.com/article/SB20001424052748704506404575592313664715360.html

President Obama's Trip to India

President Obama is planning a trip to India, but everyone is asking why? People point out that he’s going there to see the festival of lights, but as we have seen from various government officials this is just a red herring. If you look at his itinerary you will see that he is also planning a meeting with the President of India, China, and Russia while on this 10 day trip costing almost $2 billion in some estimates.


If you read my previous article, “Federal Reserve Bankrupting America,” you’ll see a reference to BRICs. BRICs are an acronym for Brazil, Russia, India, and China. I can’t prove this, and I doubt many could, but I think that President Obama is meeting with 3 of the 4 BRICs nation’s heads of state in order to get them to continue buying more US Bonds. Just recently the Federal Reserve held the QE2 or Quantitative Easing 2 meeting. This could mean that the BRICs may no longer be willing to buy US Bonds. The US credit rating could also be in the process of being dropped from AAA to AA making the interest too high to borrow money from these nations.

Could the US be facing another credit rating decrease? I would say there is a definite possibility of this happening. The US is expected to reach 100% debt to GDP by 2020. With the Federal Reserve printing $600 billion-$1.2 Trillion to stimulate the economy this may cause our debt to reach 100% of our GDP by 2015…or even sooner. This would be a cause for alarm to the many nations that buy US Treasury bonds which may end up getting them to refuse to buy any more bonds. I don’t know the details, but Glenn Beck is doing a segment tonight outlining 15 days to the NWO if foreign countries stop buying US Bonds. This could be a very real possibility as far as foreign countries buying US Bonds and I have no comment regarding Glenn Beck’s segment tonight on Fox News Channel.

If we are fortunate though, President Obama may be trying to restore our credit rating by petitioning these BRICs governments to restore our AAA credit rating. Just like with any loan your credit rating determines your interest rate and your income determines how much money you can borrow. When you have good credit you can borrow more money because less of your money is going towards interest payments. The same goes with the US, with our skyrocketing deficits (newest estimate is 1.5 Trillion for 2010) under the Obama administration along with our current unemployment crisis which some estimate to be between 9.5-16.9% we become the equivalent of a high risk loan.

Is there something we can do? Possibly! On November 2nd, the Republicans took over the purse strings in the House of Representatives. If the Republicans continue with business as usual I would suggest preparing for the worst. If the Republicans decide to take the opportunity to provide the people with what they’re asking for and decide to listen to the American Public for once, we might have hope. Representative Eric Cantor is running for House Majority leader against Representative John Boehner. I think the Eric Cantor would be the best candidate for this position because he will be the one to put us back on the road to fiscal responsibility. Rep. Cantor has been on Greta stating that if the Republican party doesn’t stop spending then he will leave the party. I see that as a sign of hope along with his new website http://republicanwhip.house.gov/YouCut/review_thx.htm where you can suggest cuts to government programs to help bring down our deficit. I think this is the most responsible way to cut government and allow the people to find the waste while the government is doing the same. Please write your local representative and ask them to vote for Eric Cantor for Majority Leader.



Sources:

http://en.wikipedia.org/wiki/2010_United_States_federal_budget

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNaqecavD9ek

http://finance.yahoo.com/news/A-look-at-the-itinerary-for-apf-2049147615.html?x=0&.v=4

http://www.seoulsummit.kr/eng/goPage.g20?menu_seq=G20MENU00062&return_url=TOP02_SUB02

http://www.cnn.com/2010/POLITICS/11/05/obama.asia.cost/