EconomicCrisis.US

It finally happened. Last week, one of the big bond rating agencies, Standard and Poor’s, put a “negative” watch on U.S. government debt. This is the first time the good old US of A isn’t AAA-rated with a “stable” outlook.

How long can we spend $1.40 for every $1 we bring in? According to S&P, the chickens will come home to roost as early as 2013 if Washington doesn’t start getting our nation’s finances in order.

The credit watchdogs are rightfully worried the right and the left won’t come to an agreement to reduce deficits until it’s too late, resulting in a possible downgrade of our actual bond rating, from AAA to AA, and not just a downgrade in the “outlook.”
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Long-term trends in the labor market have been particularly brutal for men, but our Washington policymakers appear to be either unaware of such trends or to have ignored them for the most part. Over the past decade, the total number of jobs for women went up by close to a million. Meanwhile, men lost more than 3 million jobs. From 1960 to 2008, the average unemployment rate for men 25 years and older was 4.2 percent. In the last two years, it has more than doubled, shooting up to 8.9 percent. By contrast, unemployment for women of the same age and for the same period of time went from 4.7 percent to 7.2 percent, an increase of 52 percent. The disparity is more striking if one considers that women’s rate of participation in the workforce has risen sharply since 1960 while the percentage of men in the job market has been shrinking.
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The recent financial collapse actually started back in the mid-1970s, when “redlining,” banks denying loans for homes in poorer neighborhoods, was identified as a problem. It took another two decades for Congress to devise a way to increase lending in depressed areas.

If Wall Street investment monies could be made available to Main Street banks, so the theory went, banks could make more mortgage loans. So, Congress effectively removed the separation between investment and depository banks when it repealed the Glass-Steagall Act of 1932 by passing the Gramm-Leach-Bliley Act of 1999.
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Introduction: Peter Schiff is CEO of Euro Pacific Capital, a full-service registered broker/dealer, member FINRA/SIPC, which specializes in foreign securities. He is recognized for his knowledge of the foreign securities markets as well as the currency and gold markets.

Mr. Schiff delivers lectures at major economic and investment conferences, and is quoted often in the print media, including the Wall Street Journal, New York Times, L.A. Times, Barron’s, BusinessWeek, Time, and Fortune. His broadcast credits include regular guest appearances on CNBC, Fox Business, CNN, MSNBC, and Fox News Channel, as well as hosting the daily Peter Schiff Show on radio. As an author, he has written five bestselling books, including the recent: “Crash Proof 2.0: How to Profit from the Economic Collapse” and “How an Economy Grows and Why It Crashes.”
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