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Saturday, July 30, 2011

(UK) Treasury preparing for the worst in ongoing US crisis

The Treasury is drawing up emergency plans this weekend in case America defaults on its debts as political bickering in Washington threatens to take the world’s biggest economy to the brink of disaster.
Chancellor George Osborne, the Governor of the Bank of England Sir Mervyn King, and the chairman of the Financial Services Authority Lord Turner, have held frequent discussions in recent days and are understood to be outlining plans in the event of American politicians failing to reach a deal on the budget deficit this week.
A default by America would send shock waves round global financial markets. 

One analyst said the worst scenario of an ongoing default would be like a Lehman Brothers collapse happening every two weeks and would send the world into ‘a sudden and severe depression’.

Such a crisis is still seen as unlikely as politicians are expected to reach a last-ditch compromise rather than risk catastrophe, but after the recent financial crisis officials are preparing for the worst... 

Even without a default it is widely seen as almost inevitable that America will lose its coveted AAA credit rating with the world credit rating agencies – an event that would mark a watershed moment in what history may come to regard as the steady decline of America’s position as the world’s pre-eminent economy.

The American stock market suffered its worst weekly slump as the debt deadline approached with no sign of a resolution…

 My comment: At the beginning of 2007 almost all Economists, Politicians, and Bankers would have categorically denied even the remote possibility of an Economic Crisis of the magnitude that would lead to the collapse of Lehman Brothers. They would not only have denied such a possibility, they would have laughed in anyone’s face that would have suggested such an outcome. So today, they tell us that it is unlikely that the US will default; that is a huge change of attitude from even  3 months ago when ‘experts’ refused to even consider such a possibility. But like the crisis of 2008 and the Lehman Brothers collapse teaches us in the financial world the impossible is not only possible it is very probable. So the US default which will lead to a collapse of the dollar is much more LIKELY than most ‘experts’ would dare to admit. It is a near certainty; the only question is how long before the dollar goes the way of Lehman Brothers? 

The longer this DEBT–CEILING charade is played out in Washington, the more convinced I become that this is a staged drama to bring about a collapse of the Global Economy and blame it on everybody and their dog but the real culprits, the International Banking Cartel that runs the world.

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