Today, the rating agency Fitch downgraded Portugal's debt to AA- from AA. This is not entirely unexpected. The U.S. dollar index surged on the news and commodities generally moved lower.
The rotating sovereign debt default death-watch continues. Several countries' financial situation continues to deteriorate in an unsustainable manner. The holes in the dikes are getting bigger and more frequent. In the meantime, equities and various other sectors around the world are blowing into greater and greater bubbles on the back of artificially low interest rates aimed at preventing (or shall I say forestalling) impending private and government debt collapse. The Euro is threatened, the British Pound is threatened and ultimately the U.S.$ is threatened as the focus rotates from one to the next to the next.
Do I sound a little concerned? Cynical? Well, it would help a lot if nations would start dealing with reality rather than engaging in Cinderella-like behaviour. Maybe then I wouldn't be so terrified by what I see.
At the base of this crumbling pyramid we have the U.S. and the world's current reserve currency, the $US. Unfortunately, this base looks pretty rotten. See my previous blog entry on the tragedy of America here.
