In April, 2011, international credit rating agency Standard & Poor’s lowered the U.S. credit rating from “stable” to “negative”. Meanwhile, it was reported in the agency’s press-release that long-term and short-term ratings of the state are confirmed on the ААА/А-1+ level. The agency’s experts explained their decision by saying that more than two years have already passed from the beginning of the current crisis, but the US government still has scheduled neither any clean-cut budget problems solution plan, nor any budget consolidation strategy for the long-term perspective.
“We assume that there is a serious risk that American politicians won’t have managed to achieve the agreement concerning budget consolidation in medium- and long-term perspective by 2013” – was stated in the S&P report. “If this agreement isn’t achieved, and no particular steps are taken by that time, it will make the US budget positions considerably weaker than in other countries with a AAA rating.
World stock markets instantly reacted to this news: British indicator FTSE100 has fallen by 2.26%, German DAX by 2.29%, and French CAC40 by 2.44%. American stock markets also opened bids in a “red” zone: the DJIA index fell by 1.56% an hour after the trading session began, broad market indicator S&P500 by 1.41%, and high-tech Nasdaq fell back by 1.72%.
On the mineral market, the price of oil per barrel dropped by 1.79% at $121.20. At the same time, gold quotes have increased by 0.68% at $1495.08 for an ounce.
In Russia, the MICEX index dropped by 3.7% in several minutes.
Here is the reaction of analysts of one of the major Russian banks, Bank VTB:
“The Standard&Poor’s revision of the U.S. credit rating projection is considered by the majority of market participants as a purely political move that urges the U.S. Administration and the Republican majority in the lower House of Congress to achieve compromise in assuming the measures for budget deficit reduction and stabilization of national debt amount. The fact that the respective decision was made at the height of discussions concerning national budget strengthens this opinion. Thus, yesterday’s S&P decision should be considered rather as an attempt to influence internal political processes, than as a revision of one of the debt markets’ bases – the US AAA rating.”
Put simply, no one believed in the possibility of real default or any other financial problems in the U.S. Meanwhile, Standard & Poor’s is a very serious agency and its projections are thorough and accurate. So, why did nobody believe in the U.S. problems? The answer is in the U.S.’s skillful policy towards the global community’s consciousness manipulation. There are several methods. For example, take religion; when people are kept within strict bounds and forced to believe in what the manipulators want them to believe without any logical explanations. This method, by the way, is widely used in the armed forces. Another classical way is mass hypnotism. Here we need a vivid personality of a leader – a chief – whose flaming speeches are capable of inspiring great masses of people (as was the case with Nazi Germany and its leader Hitler).
In its policy, the U.S. uses one more very efficient method. It may be called: long-term policy of favorable image creation. It’s a classical business method: firstly, a company creates an image of a reliable and developing organization, and then it enjoys its capital, the public attracted by this image, regardless of how the company’s business is really going. Such a method is beloved by financial pyramids. What does the U.S. do? Year after year, over decades, the U.S. tells the whole world that the dollar is the most stable and strong currency. And people believe in this, especially those who live on the post-Soviet territory and in other Third World countries.
Actually, since the ’70s, the dollar can’t be exchanged for gold, and on the whole it isn’t collateralized by anything. However, until recently, the dollar maintained the status of the world’s reserve currency and the world’s shelter-currency in corpore.
To get seigniorage revenues on a wing and a prayer for almost 40 years, one should have an unsurpassed skill. Of course, it’s not that simple. Besides advertising and propaganda, the U.S. authorities undertook many at times openly fraudulent actions. If such actions were undertaken by some other country, this country would be immediately exposed, and, at the minimum, virtually torn to pieces by world society.
For example, one of the actions was the change in method of gross domestic product calculation in the beginning of the ’80s, which brought distortions into real GDP calculation. It was exactly the period in which they started to use such “wonderful” indicators as “inflation index without food and energy constituent”, “pre-conscription rent”, hedonistic indexes, etc. Some of these changes considerably influenced U.S. real GDP evaluation and ensured economic indicators necessary for the confirmation of the U.S. absolute world economic leadership.
If someone dared to doubt the reliability of American currency, he was just mocked. Anyway, the majority of people always believed in the dollar’s solidity and will believe in it in the future. That is why, despite the objective U.S. problems in the economy and inevitable dollar weakening, we will be frequently hearing cheerful speeches that “The USA is still the leading economic state with strong economy”. And everyone will believe in it again.
It is unlikely that within the next few years a default will happen in the United States and the dollar will turn into just a beautiful green bit of paper. Most probably, the dollar will preserve some of its reliability for a long time, at least because most of the currency users expect this reliability from it. The point is that you shouldn’t believe propaganda. Think for yourself and analyze what sounds more real: the words of the U.S. officials, or authoritative independent experts.