Washington Faces Possible Armageddon Unlike Any Since Civil War

The U.S. debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances yet, despite the utter gravity of our plight, nothing is being done to change our course. Washington must either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America. Words: 938

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited [..] excerpts from Martin Weiss’ (http://www.moneyandmarkets.com) original article* for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Weiss goes on to say:

The United States government and its agencies have, by far;
1. the largest pile-up of interest-bearing debts ($15.6 trillion),
2. the largest accumulation of unsecured obligations (over $60 trillion),
3. the largest yearly deficit ($1.6 trillion) and
4. the greatest indebtedness to the rest of the world ($4.8 trillion)… of any country in the world.

In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. Unlike Washington’s debts, however, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

Despite the utter gravity of our plight, nothing is being done to change our course. To whit [below are 9 consequences of such inaction] …

1: Higher Interest Rates
Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

2: Higher Bond Yields
All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof because, when Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

3: Higher Mortgage Rates
Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates. If you want to take out a 30-year fixed mortgage (now close to 5 percent) on a median-priced home ($178,300), and you can afford a 10 percent down payment just …
a) a 1 percent rise in rates will drive your monthly payment from $861 to $962 [that’s $1212 a year!]
b) a 2 percent increase will drive it to $1,068 [that’s $2,484 a year!!) …
c) and the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford. Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives… (Go here to continue reading this article – no registration will be necessary.) 

*http://www.moneyandmarkets.com/armageddon-10-37926 (Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. To view archives or subscribe, visit http://www.moneyandmarkets.com.)

Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
– Permission to reprint in whole or in part is gladly granted, provided full credit is given.