U.S. Credit Rating May Tank

U.S. Credit Rating May Tank, Unemployment Up, & ‘Change’

U.S. Credit Rating May Tank: “U.S. Likely to Lose AAA Rating: Analyst Prechter” is 6/17/09 headline on this moneynews.newsmax.com/street talk post. This post is about the views of Robert Prechter on the U.S. credit rating and outlook on the U.S. economy. They might be just the views of another technical analyst if Mr. Prechter hadn’t predicted the 1987 stock market crash, and if he were alone in his views, but such is not the case and so here are some of his thoughts:

• “…he sees the United states losing its top AAA credit rating by the end of 2010 … as the government issues trillions of dollars in debt to fund efforts to bail out the economy.”
• Speaking on the stock market Mr. Prechter says, “There will be a leg down in stock prices, and it will affect all other areas,” including corporate bonds and commodities, said Prechter, who is executive officer at research company Elliot Wave International, based in Gainesville, Georgia.”
• “Federal Reserve Chairman Ben Bernanke has not averted a re-run of the 1930’s Great Depression, even though investors are becoming firmly convinced that the Fed has avoided disaster and that the economy has hit bottom.”
• “It’s the next leg down (in stocks) that will make it clear that these things are not true.”

Unemployment Up: “Unemployment of 10% Spreads, Risking U.S. Recovery” is the title of the  Shobhana Chandra article at Bloomberg.com on 6/19/09. The article speaks to the rising unemployment in the U.S. and where in might go from here. Here are a few key points:

• “More than one-quarter of American states now have unemployment rates higher than 10 percent, and all but two saw a further job-market deterioration in May.”
• “… eight states – - including California, Florida and Georgia — reached their highest level of joblessness in May since records began in 1976, the Labor Department reported today in Washington.”
• “… said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. …The biggest increases in unemployment will be in the states most dependent on manufacturing, construction and financial services.”
• “Michigan’s jobless rate, at 14.1 percent, showed the biggest jump from April and remained the highest in the nation.”
• “The (U.S.) jobless rate reached a 25-year high of 9.4 percent last month.”

‘Change’: “Best Prepare; For Change We Will” says the Mike Folkerth – King of Simple headline on his blog, mikefolkerth.com this 6/19/09. Mr. Folkerth says change is coming and preparation is important. Here are some of his views:

• “Remaining a skeptic of mine and other claims that the U.S. has reached zenith for positive growth is one thing. Failing to take any preventive actions in the event that this dour prediction is true, is quite another.”
• “We need to be cognizant of the world outside of our own neighborhoods. In a new report out today from a U.N. agency, the people in the world who are going hungry now exceeds a Billion for the first time in history. Preparing against that possibility within our own families and communities should be a priority.”
• “We have reached the point that individual actions are the only cushion that one will have against the continual application of failed government policies.”

We couldn’t have said better ourselves Mike, as next week we turn to Part 2 of our series on “Investments In Farmland”, and why investors are doing it  along with other weather events. Until next time: keep your eyes on the horizon as the weathers changing fast.