Only 4 Days to D-Day! What to do …

If there ever was a time to see our blockbuster video, American Apocalypse, this is it! (Click here and it will play automatically.)

The reason should be self-evident:

We are now just FOUR days to D-Day — August 2nd, the day that Congress and the White House must agree on a deal to raise the debt ceiling or face the most catastrophic fiscal event in the nation’s history: DEFAULT!

Even if you go back to the Great Depression of the 1930s … to the great influenza pandemic … or to the Civil War, you cannot find a time when the U.S. was this close to default.

For everyone in government — every member of Congress, and of course for the president of the United States — the political ramifications of a default would be catastrophic. And that’s why we believe that, in order to avoid a default, they will find SOME way to raise the debt limit in the 11th hour.

Of course, no one knows what they’re going to do this weekend or in the hours before the ultimate deadline. But here’s what we do know. Even without a default …

The credit rating of the United States of America
WILL ALMOST DEFINITELY BE DOWNGRADED!

Here’s why we are so certain:

First, according to S&P, there is only one way for Washington to preserve its solid gold credit rating: Congress must pass a “credible” plan to cut government spending by $4 trillion.

But nobody — not the Republicans, not the Democrats, and not the President of the United States — are even proposing spending cuts that come close to that $4 trillion figure.

The second reason is because of the rapid build-up of momentum toward a downgrade.

Weiss Ratings started the ball rolling over one year ago, on May 10, 2010, when we publicly challenged S&P, Moody’s and Fitch to downgrade U.S. debt.

Eleven months went by. And during all that time, S&P, Moody’s and Fitch still did not budge, did not issue a downgrade. Despite a rapid, deep — and tragic — deterioration in Washington’s fiscal condition, they continued to give the United States a stellar, triple-A rating.

So we decided we could wait no longer.

Exactly five months ago, on April 28, we issued our own sovereign debt ratings of the United States, giving Uncle Sam a C, the equivalent of a triple-B at S&P.

The media said we were crazy to give the United States such a low rating, while our subscribers said we were crazy to give the United States such a high rating!

Then, just two weeks ago, on July 15, when some of our more market sensitive metrics of the United States credit declined even further, we took another step: We downgraded U.S. debt to C-, just one notch above what we would consider the red danger zone.

Just three days later, on July 18, we finally saw some movement: Egan-Jones followed our downgrade of the United States with a downgrade of its own.

And now, here we are with all the ducks in a row for a downgrade from the majors.

The Dire Consequences

With a downgrade of the U.S., the world’s economic, social and geopolitical order is going to be turned on its head, and the vast majority of U.S. citizens have no idea what’s about to happen to them.

We’re about to wake up in a world where the government of the United States is no longer the gold standard for economic stability, no longer the ultimate refuge of safety for world investors.

We’re about to awake to an America where future default is not only thinkable, it’s actually possible; and some might suggest, even probable.

Most people, even Wall Street pros, think this is not going to have a big effect on them directly. They’re dreaming!

U.S. treasury securities are the foundation of every market in the world. They’re the glue that holds everything together.

For almost a century, the United States was a rock. U.S. treasuries were more than just rated “AAA.” They were rated an  UNQUESTIONABLE triple-A.

If Washington’s credit is questionable, what does that say about the credit ratings awarded to cities like Albany, Springfield, and Sacramento … or to states like California and Illinois?

What about the stocks and bonds issued by this nation’s banks and other institutions? What about the debt sold by our largest corporations?

These companies and institutions don’t operate in a vacuum. They operate in the United States of America.

This means we’re about to see much more than the simple downgrade of one government’s debt; we’re about to witness the downgrading of thousands of borrowers.

The first inescapable consequence of the downgrade will be substantially higher interest rates. That alone will push many consumers, companies and state and local governments to the brink of the abyss.

But it’s only the beginning of the woes to come. The fact that more money will be going to interest payments also means that less money will be spent in other sectors of the economy.

It means fewer homes will be sold and that the decline in home values will accelerate.

It means that fewer credit card purchases will be made and that every company that counts on them is hurt.

It means soaring unemployment as these companies struggle to survive.

It means falling earnings and a world of hurt for the U.S. stock market and for millions of investors who have entrusted their life savings to Wall Street.

Most of all, it means that there will only be ONE entity left that is empowered and motivated to respond: The Federal Reserve.

The Fed will be the sole source of stimulus and that stimulus will come exclusively from one thing MONEY PRINTING that devalues the U.S. dollar.

How do investors protect themselves from this?

They have to go on the offensive. They have to take steps to go for major profits from this crisis.

Here’s the key: Before, a flight to quality was defined as a flight into U.S. Treasuries.

Now in this new world, a flight to quality will be a rush OUT of financial assets into stronger foreign currencies and gold.

That’s a massive transformation that can drive equally massive profit opportunities.

See our video, American Apocalypse. It has gotten rave reviews.

Good luck and God bless!

Martin