Who Missed the Most Important Story of the Year?

Online, September 14, 2011 (Newswire.com) - As a fixture in the financial industry for over 25 years and the CEO of USA Wealth Management, LLC, Dennis Tubbergen has become well known for his comments on the U.S. and world economies. But on his September 7, 2011 online blog, Tubbergen asks a significant question of the average American: Did you miss the most important story of the year?

"One of the most important headlines of the year, in my opinion, seemed to be missed by most of the mainstream news media outlets," began Tubbergen in his blog. "But it was picked up by the Financial Post."

In part the article from the Post reads, "Insatiable demand for safe haven U.S. government bonds is helping mask a potentially huge financial problem - the need to extend the maturity of debt issued by the United States.

The United States has the least balanced maturity schedule of any major nation. Over 70% of its bonds mature within five years, compared with an average 49% for the 34 member countries in the OECD."

The article goes on to state that marketable U.S. debt has climbed to from $5 trillion at the end of 2007 to over $9 trillion and that's before our government bailed out our financial institutions and increased spending.

One of the worst implications here is that U.S. debt demand, according to the Post, is "closely linked to the dollar's reserve currency status and this is slipping."

"So let's get this straight," comments Tubbergen. "The U.S. has marketable debt of about $9 trillion and, according to this article, over $6 trillion - about 70% - is coming due within the next 5 years. THAT is the big news that not many folks are talking about."

According to Tubbergen, that $6 trillion number does not take into account additional deficit spending.

"As you know, the U.S. is not operating with a balanced budget so the $6 trillion dollar number will need to be increased in order to finance additional deficit spending," cites Tubbergen.

"Add the additional debt that needs to be financed as a result of deficit spending to the already high level of debt that needs to be refinanced and you have a debt finance and refinance number so large that it begs the question, 'Can this level of debt be financed?'" asks Tubbergen. "Not from my perspective."

Tubbergen gives three reasons for his negative conclusion.

"One, China holds over $1 trillion in U.S. debt and, as the article states, the country has indicated that it wants to reduce its reliance on the U.S. Dollar. That being the case, it's highly likely that China will not increase its U.S. Dollar holdings; instead, the country may elect to reduce its holdings. That is bad news for the U.S. Treasury."

Reason number two is that, given the current state of U.S. finances, Tubbergen has gone on record stating his opinion that there will most likely be another U.S. credit downgrade before the end of 2012. Should that occur, confidence in the U.S. Dollar will probably erode even further and make it more difficult for the U.S. Treasury to finance U.S. debt at today's low interest rates. And according to Tubbergen, as confidence in the U.S. Dollar wanes, investors will demand higher interest rates to hold U.S. debt, as has already occurred in many European countries.

"And three," states Tubbergen, "if the U.S. is forced to finance this massive debt at higher interest rates, the slide down the slippery slope toward insolvency accelerates."

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices at 961 4 Mile Road N.W. in Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at www.dennistubbergen.com and a monthly newsletter at www.moving-markets.com. His weekly talk show The Everything Financial Radio Show is simulcast on three Michigan metro stations and also airs to over 600,000 financial advisors.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.