My last post notified readers that all three of the major credit-rating agencies have warned that the USA will have its debt ratings dropped below AAA (or even lower in the case of S&P which already has dropped the US bond rating below that level) if a serious settlement is not reached to avoid the looming “fiscal cliff” for the US federal government’s finances. This post will examine the subject in an even more serious light, given the obviously “non-serious” proposal just offered by President Obama as reported yesterday in the media.
The first link is the on-line version of a story by USA Today re: Obama’s latest proposal. It varies somewhat from the print version of the same story in today’s USA Today by the same authors, but the two versions are substantially similar. Both reveal that the White House has no serious intention of making any compromises to avoid going over the fiscal cliff. Obama’s latest proposal is even more unacceptable to the GOP House and even less indicative of any attitude of serious compromise than any previous proposal by the White House.
Obama proposes even higher tax increases than previously proposed, and he offers no serious spending cuts to take effect right away. Indeed, Obama wants to “punt” the entire sequestration issue down the road another year, and he now makes an extraordinary demand: that the entire Congress (Republicans and Democrats alike) neuter its own Constitutionally-bestowed “power of the purse” over federal spending by agreeing to let the executive branch expand the US federal debt in an unlimited manner without any additional approvals from or reviews by Congress. US House Speaker Boehner spurned the proposals immediately, calling them “outrageous.”  Boehner’s rejection of the White House proposal was entirely predictable, and I think even many Congressional Democrats would be entirely unwilling to cede so much Congressional power to any president. Obama’s position that he be given the power to increase the US debt to unlimited dimensions smacks of a reach for dictatorial powers. In doing this, Obama may be a pawn for the Wall Street/banker, insider elites who may have more plans for bailouts to the ultra-rich on a scale far greater than anything done to date.
The on-line version of the article includes in Obama’s proposal something not mentioned in the print version. That is a demand by Obama to be able to “refinance underwater mortgages.” The second link, dated earlier in 2012, reported that approximately 28% of all US mortgages are “under water” (where borrowers owe more on their homes than they are actually worth in today’s market). Combining Obama’s desire to have the federal government bail-out all underwater mortgages with his other stated desire to have the Congress give him unlimited debt-expansion rights, one can infer that Obama’s handlers want to bail-out the entire US mortgage market in some manner, adding trillions of dollars to the already out-of-control US deficit. These bail-out checks would likely not be mailed to US homeowners, but would likely be direct bailouts to the big banks and moneylenders who hold the mortgages. Indeed, Obama’s desire to be able to put US taxpayers into unlimited debt bondage may mean something even more nefarious: an eventual bailout of the big banks’ bad derivatives positions. The total nominal value of the unregulated derivatives contracts amount to an estimated $639 trillion dollars (see third link)! Try to imagine the size of the US debt if bad derivatives are also bailed-out!
The federal government “officially” declared an end to the current “Great Recession” years ago, but the fourth link strongly indicates the recession never ended. A study by the Brookings Institution (often regarded as a liberal think tank) reveals that only three of the largest seventy-six American cities are showing any signs of recovery from the recession. Excuse me, but how can there be any “recovery” at all if 73 of the largest 76 cities aren’t showing any signs of recovery from the recession yet? Also, if you want to see what the real unemployment and inflation rates are in the US economy, check them out at You will see that the “official” unemployment and inflation rates are statistical jokes.
If there is no agreement on revenue increases and spending cuts between Democrats and Republicans in Washington, DC (or if they merely “punt” the issue down the road again), how bad could it get? It could get much worse than you are being told in the establishment media. I haven’t seen any mention yet of the creditors’ rights and powers over US federal debt. China, Japan, Germany, Saudi Arabia, sovereign wealth funds, large investors, foreign central banks, etc. are all very large creditors/holders of US debt instruments, and, as creditors, they have considerable powers. The greater the debts become, the more power passes to the creditors (as Proverbs 22:7 correctly notes). All foreign governments, banks and investors have likely seen in Obama’s latest set of proposals that the White House has no intention of ever getting American finances in any kind of rational order. Indeed, it sounds like Obama wants to make the debts infinitely larger than they are already, which has to make every holder of US debt (or dollars) not only very nervous, but very angry. What might they do if US politicians do nothing to get the USA’s financial house in order?
I am not making a prediction in what follows, but I am pointing out what is very possible. An example of what could happen to the USA is found in the EU’s treatment of Greece, Italy, Portugal, Spain and Ireland (nations with out-of-control spending problems). All the large foreign creditors of the USA could convene in a special meeting where Obama, Geithner, Bernanke, etc. are summarily told that they cannot attend. Behind closed doors, foreign nations could come up with a list of demands that Obama and the US Congress will be required to meet “or else.” The demands could be that the US government immediately cut its federal workforce by 15%, cut its total outlays by 15%, cut its defense spending by 15%, enact indefinite salary freezes and implement entitlement reforms to both Social Security and Medicare, increase federal taxes by $1 trillion a year and agree to submit US budgets to the review and approval by an international creditors’ committee before their implementation. If the US government does not meet these demands, many foreign governments could collectively agree to no longer ship any goods (oil from Africa, Latin America and the Persian Gulf, clothing and electronics from China and the Orient, etc.)  to the USA unless such goods are paid for in advance via gold, silver, Euros, Yuan, Yen, etc. In other words, all foreign creditors could agree to no longer honor the US dollar in global financial transactions until the US agrees to their demands. If this scenario unfolded, the US dollar would quickly lose its global reserve currency status, and the US Federal Reserve Board would, therefore, lose its ability to continue to fund US deficits with endless supplies of fantasy money created out of “thin air” and then “loaned” to the US federal government.
My previous post notes that many global government bond funds buy and retain only those government securities which have AAA ratings. If the USA loses its AAA rating, all these global bond funds may be required by their fund rules to dump US treasury bonds on the market…all at once. I leave to your imagination the incredible damage that would be caused to the dollar, the interest rate and inflation levels in the USA, etc. if this happened. Expect major pressure from the US government on the ratings agencies to not give the US debt the downgrading that it eminently deserves; however, if the fiscal cliff crisis is not resolved with serious debt-cutting and revenue-raising measures by the White House and Congress, the ratings agencies will retain little global credibility if they do not downgrade US debt ratings.
As I’ve noted in many posts, Revelation 17-18 prophesy that the global monetary/financial system in the latter days will experience a catastrophic collapse, triggered by the actions of “seven heads and ten horns.” This may be 17 nations or it may indicate some other kind of combination of entities or key national leaders or powerful behind-the-scenes leaders. The global financial/monetary system has long been dominated by the US dollar, and the US Federal Reserve Board, which creates US dollars. This dominance must be overturned, it would seem, to fulfill the prophecies of Revelation 17-18. The amazing inability/unwillingness of the US White House and Congress to put US finances in order are hastening the fulfillment of the Bible’s prophecy.
Obama’s harshly partisan and power-grabbing set of proposals has led Speaker Boehner to say that a settlement is nowhere in sight. Don’t get me wrong—I think the GOP also needs to compromise. I think the GOP needs to agree to revenue increases and tax-rate increases for the rich (indeed, President Reagan’s top tax rate for the rich was 50%—why is the GOP resisting an increase from the current 34% to a 39% level? Even that rate is 11 percentage points below what Reagan thought was fair).

The fiscal cliff is only one month away. If the nation goes over that cliff, it may find that there is no bottom once it goes over that cliff. Maybe foreign creditors will tolerate a longer period of fiscal irresponsibility by US leaders, but it is also possible that the USA will begin to lose control of its own destiny as foreign creditors begin to take actions to impose necessary fiscal actions on Obama and the Congress. The fulfillment of Revelation 17-18’s prophecies continues to draw nearer even as we watch.