The Second Great Recession is Underway

America has never recovered from the Great Recession.

Our government and financial institutions lied to us.

Get Ready for Round #2!

Back then, we naively assumed our problems sat at the surface, never thinking they were as deep as the Mariana Trench.

We trusted too much. It cost folks EVERYTHING!

We’re more alert this time. But people found news ways to create old problems.

If you’re not careful, you could see YOUR LIFE SAVINGS VANISH… not in years… but months!

This newsletter serves as a bulwark between your wealth and the abyss.

Today’s, in particular, lifts the veil on the forces colluding behind the scenes to drive us into the next economic crisis… forces that wear sheep’s clothing.

Only you can decide what to do with what we give you.

A Moral Hazard Unlike Any Other

Ratings agencies were among the most evil actors during the Great Recession: Standard & Poor’s, Moody’s and Fitch.

Banks paid these companies to rate their debt and the debt they issued.

Naturally, a moral hazard arose.

If a bank didn’t like the company’s rating, they paid another company that  was more amenable.

It’s why you had these swindlers giving bundles of mortgage-backed loans top ratings up until the moment they failed.

They acquiesced to greed and shirked their fiduciary duty.

Now, these charlatans are back in the news.

You probably saw the headlines pour across the screens when Fitch decided to downgrade U.S. debt.

It was a lie… or disingenuous, at the very least.

Yet, people still trust these fraudsters. So, panic selling ensued in both U.S. Treasuries and the equity markets.

Here’s the truth regarding the “downgrade.”

Unless you’ve been living under a rock, the U.S. government has TONS of debt. And it keeps growing.

In 2011, Standard & Poor’s downgraded the U.S. debt because of political brinkmanship.

Citing similar concerns, Fitch decided now was the time for them to jump onboard… over a decade later.

Let’s be clear…

NO U.S. institution will change how it invests in U.S. treasuries based on the downgrade.

Having the highest or second highest credit rating doesn’t affect any funds or companies that required to hold high-quality debt.

And the United States has NEVER defaulted on its debt, EVER. Nor is it likely at any time in the near future.

Despite the bluster, politicians would be committing political suicide if they let the United States default on their watch.

Some naively don’t understand how the Treasury Department works. Others don’t believe what the Treasury Department says (which is something you do after, not during negotiations).

And there is very little reason to believe any sitting president would let it happen. He’d rather risk court interventions after taking executive action than let the country default.

So, who is selling all the U.S. debt all of a sudden?

Our best guess: Japan.

And the Japanese are doing it because of THEIR central bank’s decisions.

The Debt-Equity Market Dynamic

Fitch drove unnecessary panic into the market, especially amongst retail investors.

That panic drove 10-year Treasury rates towards 4.2%, which isn’t that high, all things considered.

But this gave folks who were looking for a reason to sell something to hold.

By no means do we think equity markets are on solid financial footing.

However, headline-driven temporary dislocations allow big banks, who still pay these agencies, to scoop up shares from panic sellers, push the market higher and then unload them back to these same folks at higher prices.

How do we know this?

Consider the case of Silicon Valley Bank.

All the ratings agencies knew the bank was overleveraged. They saw their balance sheets with heavy investments in short-term treasuries, watched interest rates rise and said NOTHING.

In fact, up until it collapsed, Moody’s and S&P gave SVB investment grade ratings.

So now, they’ve downgraded all U.S. debt based on our debt burden, which we’ve all known has been a problem for years, and the recent fiscal standoff, which occurred almost two months ago.

What possible motivation could they have… when the markets are on the cusp of all-time highs, yet sentiment is as fragile as glass?

Beat Them at Their Own Game

None of us, individually, or even as a collective group of readers, is going to change the situation anytime soon.

As free market capitalists, we can only focus on our wealth preservation and prosperity.

You might be inclined to dismiss the headline from Fitch as a one-off instance.

But make no mistake. This is a snowball building into an avalanche.

Every day we watch financial networks prime retail investors to buy high and sell low.

They NEED us to lose money to them.

But we can beat them at their own game.

No one knows how to take advantage of these situations better than Jim Woods, our options trader expert.

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