So, we can see that the world is expressing a clear disbelief about the agreement (just see China, Russia, and many US politicians, experts, medias, ... and markets reactions. By the way, you can find everyday a 'best of' on the LEAP's press review pages) because:

1 . the law on the debt ceiling is not solving anything about the key question of unsustainable US deficits
2 . Washington and the US political system is not able to deliver any efficient solution to that question as it just showed everybody how dysfunctonnal it has become. And things will get even worse with the 2012 elections approaching. The supposed to be process set up by the agreement will prove to be a catastrophic process, injecting poison into the financial and economic sphere every single day from now on till November (by displaying worldwide everyday the show 'US civil war 2.0').

Essentially, the debate killed any credibility the US authorities still had regarding their leadership role and their ability to be the last resort solution. The markets have immediately voted with the continuous fall of stocks markets worldwide.
The 'magic US touch' on world financial issues has lived. We can consider that it has been buried publicly during this chaotic debate on the debt ceiling.

As said in the abstract of GEAB N°53 we just put online on LEAP's website, the rating agencies will try as much as they can to protect the US rating, but it is already a lost battle. In matter of weeks, they will have to downgrade it when the obvious will be impossible to ignore : inability to implement the budget cuts ... and anyhow budgets cuts of a totally unsufficient magnitude. The agreement is about cuts (to be defined), which will start essentially in 2 years time (if you believe in Father Christmas) and which would represent at most 250 billions per year on 10 years ... when the annual deficit is more than 1 500 billions (a spit in the ocean as a US media said).
Then, as we anticipated, the US growth is now stalling completely and the US is entering what we called some time ago 'the recessflation' or the 'double-dip-flation'. Therefore the fantasy world's estimates (US annual growth of 3 to 4,5%) of the budget incomes which served as a basis for the calculation of this 'cosmetic agreement' are going to rapidly show that they are hugely overestimated .... triggering automatically new estimates of a much larger deficit to tackle. By Fall, all that will be coming together and generate the big shock we anticipated for this very date since last year.

The only thing that rating agencies will try to do (with strong support of Wall Street and The City) is increasing their attacks on Euroland for a last ditch attempt to break the Euro. But that's already an option which is over. The decisions taken since May 2010, strengthened 10 days ago and which will be taken in coming two/three months (including a Euroland Council) makes that Euroland is now much more disconnected from the anglo-saxon financial markets than it used to be till 2009. And you can count on China, Russia, Brazil, ... to buy as much Eurodebt as they can from now to diversify from US debts (that's one of the only concrete effect of the US debt ceiling agreement).

And as I write, more hundreds of billions of 'ghost assets' are vanishing from global stock markets. On the 15 000 billions USD of such ghost assets which we said with LEAP will dissapear by beginning of 2012, one can assess that about 3 000 to 4 000 billions have already vanished in the past weeks.

Things can be done to avoid being completely engulfed into this maelstrom as we recommended in GEAB 56, but time starts to run short. Don't forget what I keep on insisting upon in my book : 'when such an historic crisis hits, time accelerates. And we are entering now a period of amazing acceleration.'

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