As you know, I spend a lot of time tracking what’s going on in other countries, even during the few months a year my feet aren’t actually planted on the ground in some up-and-coming place we can seek opportunity in.
While I’ve never put a lot of stock in sovereign debt ratings, the momentum right now is very interesting. We’ve seen how bad a job ratings firms can do when it really matters. After all, do you really think US debt is, or recently was, “risk-free”? These groups highlight the total fraud in our financial system. Nevertheless, there is still a clear pattern you can take from all of it.
While The Land of the Free’s credit rating took a hit almost two years ago, plenty of other countries are on the upswing. Turkey had its debt raised to investment grade status and more agencies are jumping on the upgrade bandwagon for Turkey. Foreign investment is the key to success in Turkey, which may cause problems in the near-term, but I believe it is good long-term play.
Meanwhile, the Philippines has been called a “sovereign rising star” for its huge leaps in improving its financial situation and bettering its government. And while many Americans look down upon Mexico, the country south of the border is doing pretty well, with a booming economy and ratings upgrades.
The United States is a laggard in categories with dwindling European states with depression-level unemployment.
But this isn’t exactly new. What’s more overlooked in this equation is just how sore a loser The Land of the Free is when the gravy train finally slows down on the tracks. While it’s expected that President Obama would childishly blast S&P for its decision to downgrade his country’s exploding debt, it’s less expected (or well-known) that idiots like Michael Moore would come out saying the head of S&P should be put in prison.
As ratings firms weigh a further negative outlook against the US, who knows what could be next? Rather than speculate, perhaps we ought to look to Egan-Jones, a smaller ratings agency that has been rather aggressive in trashing US government debt.
In fact, they’ve downgraded it three times in relatively short order. However, by the time the third downgrade came they were embroiled in legal trouble with… guess who?
Say it with me: the government.
Big Government didn’t take too kindly to this outlier calling its debt toxic. Egan-Jones is the modern financial version of shouting “the Emperor has no clothes!” The emperor never likes being called on the carpet, and swift justice is meted out when he is. So in the case of Egan-Jones, the SEC crafted a settlement that banned them from rating US sovereign debt for a year and a half.
Meanwhile, S&P was put under investigation just weeks after its downgrade of US sovereign debt. Coincidence?
When the music stops, desperate governments will do anything to keep it going as long as they can, like children running to get a seat in musical chairs.
It’s funny because when I started this site, a family member of mine said with barely a whiff of sarcasm, “Good luck and enjoy being audited”. At the time, one could have said that was the commentary of a paranoid man rather than a soothsayer of things to come in the near future. But how true he was.
We’ve seen how the “free” government of the United States – and others like it – is totally living off of fumes. It would be like Paris Hilton claiming she’s an entrepreneurial genius and expert hotelier. She didn’t do anything; someone long ago did something so great that the breadcrumbs are still falling into her lazy lap.
Yet many Americans I talk to – even the ones that have a clue – tell me “we’re not as bad as [fill-in-the-blank] yet, but we’re well on our way”. Let me take exception by declaring the United States the new Soviet Union.
The Soviet Union concept of human rights was based on collectivism. Your own personal rights were meaningless; it was the common good that mattered. Healthcare, adequate nutrition, and guaranteed employment were among the top concerns.
Contrast that with Michelle Obama‘s desire to shove an apple down your child’s throat, government mandated healthcare, religious institutions being told they must provide birth control against their values if they’re outnumbered, and never-ending unemployment benefits so no one has to hit rock bottom.
In the Soviet Union, “terror” was a key word among KGB officials. (Sound familiar?) Sure, you could speak out, but you might mysteriously disappear or have some other unfortunate situation befall you.
Today, you don’t disappear; you’re put front and center to show the public what a bad person you were for speaking out against Big Government. You’ll be harassed by the tax authorities, have your conversations wiretapped, had your email read without your knowledge, and be brought to account as a result of those actions. Sure, you have “free speech” – so did the Soviets – but the government will change the definitions to de facto take away your free speech.
You could go on and on. Thanks to government propaganda, Americans have the image of the old Soviet Union as some constantly overcast place where you had a 1-in-3 chance of being dragged into a gulag on any given workday. In reality, most Soviets lived normal lives.
They just didn’t have any freedom. They couldn’t speak out against their government and were constantly being watched. And a lot of them didn’t trust the government for that reason.
Meanwhile, Americans continually tell me “it’s bad, but not THAT bad”. Ask yourself: when WILL it become that bad? How much Orwellian government madness has to take place before we say “it IS that bad… now”? I’m not suggesting that you’re going to be rounded up and thrown in a death camp tomorrow. Then again, 99% of North Koreans aren’t in death camps, either.
Tyranny is when government unilaterally sets the rules and enforces them as they please. There’s no rhyme or reason to it other than the whims of the ruling class. Tyrants want to disarm you, make you afraid to speak out, squash rebellious dissenters, and force you to do as they please.
It’s often done under the banner of a Constitution or some law that’s supposed to keep them in check, but as we see in countless nations around the world, government can just brush that to the side while using it as the escape hatch.
Welcome to the New Soviet Union, comrade. Dissent will be squashed through back door mechanisms so as to retain the veneer of freedom despite a growing list of USSR-style tactics.
The question is, will you wait for the hard economic collapse and bitter war defeat that brought some semblance of freedom to Russia, or will you find a greener pasture and sidestep the hard landing?