The Egan-Jones agency has downgraded the US credit rating for the second time to AA as debt to GDP surpasses the 100 percent mark and is worsening.
Press TV has interviewed Allen Roland, freelance alternative press online columnist in Sonoma California about the latest down grade adjustment to the US economy; how the administration is performing their duty to accurately inform Americans; and how this is affecting US consumers. What follows is an approximate transcript of the interview.
Press TV: What does this downgrade mean for the American economy and its recovery?
Roland: It means this…Reality is finally coming to the surface. The stock market is not the American economy. Eighty percent of the stock market is basically high frequency trading of the big boys playing games with their money.
And 61 percent of the American debt is being bought by, guess who? The Fed (US Federal Reserve Bank) – So we’re printing money. So let me give you the raw economic numbers, which basically what this is telling us – raw economic numbers about the American economy:
38 percent of all Americans are either considered to be low income or living in poverty; 57 percent of all children in the US are living in homes that are either considered to be low income or impoverished; the average amount of time a worker stays employed in the US is now over 40 weeks and according to the Bureau of Labor Statistics, 16.6 million Americans were self-employed in 2006; today that number is 14.5 million.
So, we are still in the midst of a depression. The administration is doing everything it can do to paint a rosy picture, but has nothing to fall back on.
Let me give you this simple analogy – what’s happening is this – the Fed is keeping interest rates low because it wants to trickle down the economy, they want the rich, the only people who are making money i.e. the top one percent because they got bailed out, but that trickling down is not happening.
What they want is for people to re-inflate the debt bubble – it’s not happening because Americans don’t have money; they’re just trying to survive. That’s what these figures are telling us. We are in deep trouble.
Add to the fact that the BRIC nations and other nations are starting to use their own currency – they’re ditching the dollar. This reality is hitting home, that’s what’s happening.
Press TV: The (Egan Jones) agency has argued that there has been a lack of any tangible progress in cutting the Federal debt. This Would mean that they want the US to go into a cycle like we’re seeing in the Euro Zone economies where there’s austerity after austerity and layoffs after layoffs, but it’s not really helping the economy either? It does put a lot of these large crisis-hit economies between a rock and a hard place, doesn’t it?
Roland: Yes. Look at this – according to a recent study conducted by Blacklock Investment Institute, the ratio between household debt and personal income in the US is now 154 percent. The government is even worse than that.
So it’s run on smoke and mirrors and trying to put out the picture that we’re healthy – we’re not healthy. And so finally the world is taking knowledge of this and taking account of this.
The median house price in Detroit right now is 6,000 dollars. I could give you about 50 mind-boggling stats telling you – 1 out of every 7 Americans has at least ten credit cards. In other words, the whole country’s living on credit and they’re going to have to finally take account for that.
Press TV: Where does this leave the current US credit rating as well as investor trust and confidence as far as the US economy goes because downgrades are not really going to help the US recovery now is it?
Roland: No it isn’t. First of all… it’s reality. The reality is sinking in. The age of American exceptualism is over. Our house is not in order; we’re living off credit cards; we’re living off debt. And the Fed keeps printing money and we can’t continue this forever.
They’re doing it particularly right now since it’s an election year. The one thing the administration is denying the American public, that the rest of the world already sees, is that we’re totally in debt up to our necks… and it’s getting worse.
Of course, the world knows this – these other nations know it; they’re not buying our dollars and right now 1 out of every 6 elderly Americans lives below the poverty line. We are not a healthy country.
So, expecting the consumers to pick up the slack here and drive this GNP (Gross National Product) this 70 percent of the GNP – that’s not going to happen. It’s wishful thinking – The rest of the world knows it.
We’re going down and the only reason it’s not becoming obvious to Americans particularly is because no one’s telling the truth to the extent of our indebtedness.
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