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Thread: weekend commentary - S&P downgrades US Gov't Debt !!!

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    Default weekend commentary - S&P downgrades US Gov't Debt !!!

    from


    (snip)"It happened. After quite incredible reports of miscalculations, it happened. The thing that is perversely both meaningless and full of meaning was announced on Friday evening New York time. The United States of America is now rated AA+ with negative outlook by Standard & Poor’s.

    Overview from the release below

    (snip)"Overview

    · We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

    · We have also removed both the short- and long-term ratings from CreditWatch negative.

    · The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

    · More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

    · Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us

    pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

    · The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

    Cue… well, we’re not quite sure yet.

    There are a few predictable direct effects but it’s the second, third and fourth order effects that will have people worrying over the weekend. There has been a fair amount of time to prepare but prepare for what is the question.

    It’s worth looking back at our account of the meeting between the Fed, the US treasury and the major broker dealers on the Friday before the resolution of the debt ceiling crisis. Issues relevant to preparing for a technical default are relevant here, too. For example, will there be any provisional support announced for Money Market Funds or flexibility on bank capital rules.

    It’s all about the collateral, and the deposit crisis, remember."(snip)


    Lots of potential turmoil could grow from this official ratings downgrade ...

    - a whole bunch of investors who just sold off their US stock shares and bought US Treasuries instead are probably going to take a 'haircut'

    - certain money market funds, mutual funds etc. are going to be forced to sell off certain US Treasuries they own because their charters call for only holding AAA rated debt instruments

    - US banks may have the same problem re needing the AAA rating for use as capital / loan collateral ( although US regulators may bend the rules because US banks will be screwed if they don't )

    - America's new inability to 'print' and sell AAA rated US Treasury debt now brings the 'debt quality' of other types of gov't debt into question ... from Fannie / Freddie bonds to Muni Bonds issued by states and cities. All of these are likely to experience loss of principal value, and future issues will need to carry a higher interest rate ( thus raising the cost for federal and state taxpayers who must repay these bonds with interest )

    - All US interest rates must now rise ... which could add $200 billion + per year to American taxpayers' cost of servicing future US Treasury debt, along with filtering through the US economy down to student loans, credit cards, auto loans, mortgages, commercial loans to businesses, etc.

    - the additional interest cost to US federal taxpayers will effectively 'explode' the recent debt ceiling 'deal' on the spending side due to rising interest rates 'exploding' US taxpayer debt service cost. This will bring a huge amount of pressure to bear for additional US federal tax rate increases.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    The thing that gets me about this is they're almost certainly going to have to increase taxes now...which they should have done before, and maybe the taxes would have gone to meaningful shit that benefited society. But they didn't WANT to increase taxes and there was a ton of grandstanding about it, especially from the Tea Party people. But now, they'll increase taxes anyways...and instead of going towards something meaningful, it'll just be used to pay off the debt incurred by higher interest rates...which could have been prevented if Congress hadn't been acting like a bunch of bitchy teenage girls and had DONE THEIR FUCKING JOB.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    ^^^ agreed that calls for tax increases are likely to be the #1 response to this S&P downgrade. However, to make any sort of real dent in the budget deficit situation ( and especially in light of rising costs to taxpayers for gov't debt service ) it's going to be necessary to hit middle class Americans with those tax increases, because there simply aren't enough 'rich' Americans ( i.e. the DC definition of rich at $250k per couple ) to carry the burden alone. The likely result will be higher taxes for all Americans down to a $50k-$75k per year income level ... with associated consequences such as no more money available to buy lap dances !!!

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    NO WAY does the U.S. ever not pay it's creditors..... This downgrade is stupid.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    NO WAY does the U.S. ever not pay it's creditors
    This depends on one's point of view. It is undoubtedly true that the US gov't will never fail to pay the required amount of US dollars to service US treasury bond interest and principal payments. However, from the point of view of a Chinese or Saudi owner of said US treasury bonds, being repaid in future US dollars whose purchasing power is only 1/2 or 1/4 or 1/10th that of the original US dollars 'loaned' by the Chinese or Saudi bond buyers clearly constitutes a loss. Technically speaking, S&P and other ratings agencies would consider repayment in debased currency as a default !!!

    The 'gold foil hat' crowd would probably tell you that debasement of the US dollar's exchange rate / purchasing power is just about the only realistic option still open to the US gov't.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    some insightful commentary from a professional investors' BBS ...

    (snip) referencing

    ...in which the Fed, in its low-key, "Fed-Speak" tells S&P to basically "go pound sand" and that the following Thug/Pigman entities:

    1. The Board of Governors of the Federal Reserve System

    2. The Federal Deposit Insurance Corporation

    3. The National Credit Union Administration

    4. The Office of the Comptroller of the Currency

    ...are perfectly comfortable with Uncle's ability to re-pay is Infinite Debt.

    (Grim Conclusion): Let's face it: as a few posters here have already mentioned, the Fed can buy ALL of Uncle's debt--past, present and future--if they wish. So, this "vote of confidence" is kinda important to consider before screeching:

    "This is IT!!! The REAL "IT"!!! Interest rates are gonna sky!!! The U.S. is gonna collapse!!! The U.S. dollar is doomed, DOOMED I tells ya!!! Thc Choco-Zone (and the choco) are gonna reign supreme!!! No, strike that! It's gonna be China and Asia that will be our masters!!! Run!!! Hide!!!"

    Also, as the always-calm ( RobotTrader ) pointed out, Japan--and even other sovereign entities--have been "punished" with a measly 2bps rise in borrowing costs after a downgrade of their credit rating.

    So, with the Thug agencies rallying behind Uncle's credit rating, the impact of (the soon-to-be-dearly-departed) S&P's credit downgrade will be minimized.

    However, this will make for a far more-interesting Fed FOMC Politburo meeting and statement on Tuesday, and also the 10-year Treasury auction on Wednesday ought to be fun to watch as well.(snip)


    ... in other words, the Fed and US gov't have just 'changed the rules' regarding US banking regulations involving AAA quality debt instruments ... by gov't decree all US treasury bonds will remain acceptable as capital / collateral regardless of their debt quality rating

    ... in other words, the coming Wednesday US Treasury Auction will be the first real indication of how seriously the S&P downgrade is being taken by foreign buyers

    ... in other words, the door is now open for the FED to begin QE3 money printing ... which may now be an absolute necessity if foreign buyers of newly auctioned US treasury bonds will now demand significantly higher interest rates be paid on those new bonds that the US gov't / US economy cannot afford to pay.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Melonie View Post
    This depends on one's point of view. It is undoubtedly true that the US gov't will never fail to pay the required amount of US dollars to service US treasury bond interest and principal payments. However, from the point of view of a Chinese or Saudi owner of said US treasury bonds, being repaid in future US dollars whose purchasing power is only 1/2 or 1/4 or 1/10th that of the original US dollars 'loaned' by the Chinese or Saudi bond buyers clearly constitutes a loss. Technically speaking, S&P and other ratings agencies would consider repayment in debased currency as a default !!!

    The 'gold foil hat' crowd would probably tell you that debasement of the US dollar's exchange rate / purchasing power is just about the only realistic option still open to the US gov't.
    Of course you are right with respect to the value of the money...... However this has been going on since 1913...... I thought S&P was only considering the risk of default....... Not currency debasement.





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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    from another professional investors' BBS ...


    (snip)"INT. DAYTIME: High above the capital city of a major country two credit rating executives, their sleeves rolled up, their Blackberries switched to silent, stare at each other over a desk:

    "Hey boss we got another one o' those countries getting close to our proprietory benchmark for too much debt!"

    "Bring it on! What's the deficit?"

    "9.5% of GDP"

    "Debt?"

    "97%"

    "What's the political complextion of the government?"

    "Mmm. Tough to tell: got a pinko head of state but a tough minded legislature full o' fiscal hawks."

    "So a notch or two downgrade should bring 'em into line? Can we do that before lunchtime?"

    "Yeah, but there's a problem. They're about as close to being a 'true sovereign' as you could get. Their currency's pretty crucial to the global economy and they can print it."

    "So they're not pegged to the dollar?"

    "They are the dollar. The country's called America."

    "Yikes. I see the problem. Technically speaking this America place prints the global currency of last resort so it can inflate away its own debts, devalue the currency, impose the cost o' crisis onto everybody else."

    "Yeah well that's what they did last time."

    "There was a last time?"

    "Sheesh I was forgetting, you came thru on the fast track from business school. You don't remember the Plaza Accord? 1985?"

    "Heck I was 10 years old!"

    "OK well, the 101 version is: the US negotiated with Japan and Germany to depreciate the dollar by 50% relative to their currencies enabling them to recover from recession and slash their trade deficit."

    "Cool and the Germans and Japanese just agreed?"

    "Yup. America had moral authority and Germans and Japanese were seen as rising power, a bit like China now."

    "Great Google-bee! Ay-and what happened to them."

    "Well the Japanese suffered a property boom and bust and then..."

    "Ah, that bit we did do at B-school. Boom, bust, stagnation. Wow. So this America place: they can just boss the world around and tell 'em what to do. They can use their global-status currency to offset the costs of fiscal adjustment and basically make other folks pay the cost while they go on spending?"

    "Well this is the problem. That's a moot issue now. These guys spend, what, something like $700bn a year on defense? But for some reason now they've taken to not invading places. They've got supposed allies all over the earth who don't seem to do their bidding. There is, well, a slight sense of the unravelling of global power."

    "Okay this is serious. Has the president guy got a deficit reduction plan?"

    "Plans to eliminate it over a 12 year period. It's a long timescale but pretty tough."

    "And the legislature?

    "Some of em believe the world was created 3,000 years ago! They'd run a budget surplus tomorrow if we asked them."

    "And this place is triple-A, right?"

    "Right."

    "And the technical chance of them defaulting on their debt is?"

    "Well unless some kind of alien invasion happens, leading to civil war and mass starvation, dengue fever, millenarian sects take over the seats of power etc. Zero."

    "So whadda we do?"

    "OK, well there's an election coming. And they keep having these ridiculous political stand-offs over ideological differences in the budget, leading to all kinds of weird threats to shut down the state."

    "No kidding?"

    "So while the technical possibility of default is zero - there is a greater than technical possibility that we, ourselves, will take em down a notch because of all these political shenanighans. Political paralysis is real, no?"

    "Ah! I am getting a lightbulb above my head."

    "Yup. We could put em on negative watch."

    "We could."

    "We could put pressure on them to eliminate the deficit faster than planned by issuing an 'outlook negative' warning. Which is, as you know, a warning that we ourselves could issue a warning."

    "But that could be seen as political pressure: intervening into the political debate in the most powerful country in the world. Do we really want to court controversy after all that stuff with the banks?"

    "That's very wise boss. That's why you are the boss."

    "So whadda we do?"

    "I propose we wait and see what S&P do, first." (snip)


    But to answer your question, yes there is historical precedent re Argentina, Zimbabwe etc. where a deliberate gov't policy of currency devaluation to avoid having to repay lenders 'full value' on gov't bonds factored into the 'credit risk' rating.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    and America's Chinese creditors get their 2 cents in ... from


    (snip)"NEW YORK/SHANGHAI, Aug 6 (Reuters) - China bluntly criticised the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.

    Standard & Poor's cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation's budget deficits and climbing debt burden.

    China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

    "The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.

    After a week which saw $2.5 trillion wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the euro zone crisis.

    Finance ministers and central bankers of the Group of Seven major industrialised nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.

    The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.

    "The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.

    French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.

    In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.

    "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

    It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

    "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said."(snip)

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    ... and many thanks to Lee Adler over at for potentially coming up with the TRUE motivation behind the S&P downgrade ...


    (snip)" TBAC Report Shows Why We Are Doomed
    August 6, 2011 By Lee Adler

    So the debt ceiling thing is “solved” but that may have been the least of the market’s problems. If my numbers are correct, the Treasury will need to raise money in the coming week that it hasn’t told the market about yet. My swaguesstimate last week was that they would need $96 billion of which they picked up $20 billion with a “surprise” cash management bill that settled Friday. You can read (or review) this about that, among other things, here. The latest available data suggests that my estimate was too high, but that they will still need another CMB this week.

    Meanwhile, S&P finally did the dirty and dropped the D-bomb bowl splasher at 9:30 on a summer weekend Friday night. There are some people wondering about the timing. I’m not. It seems to me that the Primary Dealers, who are among S&Ps largest clients, finally called in a favor. They have been getting destroyed on the Treasury short positions which they have held for more than a year. The bond rally has been forcing them to exacerbate their own predicament by buying in their own short positions, as well as dumping stocks and pulling their bids on everything they make markets in. They are unable to maintain orderly markets. Chaos reigns. We’ve seen this act before, in the fall of 2008. The Fed had to rescue the dealers from bankruptcy at that time. A little Treasury downgrade from S&P under the circumstances seems not coincidental.

    Will it work and finally get the rally monkey off the dealers’ backs? (snip)


    In simplest terms, Lee Adler is speculating that the primary dealers ( i.e. all of the big Wall St. banks plus important foreign banks ) have been 'losing money' by being forced to cover their own short positions on US Treasury Bonds for the past year. This short covering was also forcing the big Wall St. banks to sell off other proprietary assets like stock shares in order to raise the necessary cash. By 'calling in a favor' from S&P to downgrade those US Treasury Bonds, the resulting drop in US Treasury Bond price levels ( = increasing interest rates ) will eliminate the need for additional short covering, thus again allowing the big Wall St. banks to deploy their cash in the US stock market / commodities market etc.

    If Lee Adler's 'conspiracy theory' analysis is correct, we should see a major upswing in US stocks and commodities next week.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    ... more along the same lines from a Paid Professional Investment Advisor ...


    (snip)"S&P is missing the point, it is not about debts, not about economic policy, or entitlements. It is not about tax revenues or budget deficits. The key component of a AAA credit rating has to be military might. The fact is, you dopes at S&P, the United States could take over the entire world militarily and confiscate all wealth if it so chose. We are moral, so the U.S. won't do that, but it could. That in itself, along with the fact the U.S. has never defaulted on bills or debts, is sufficient to keep its AAA rating. S&P has taken the criminal action of destroying the wealth of millions of innocents worldwide whose financial assets are taking a major hit in anticipation of this coming downgrade. Standard & Poors, which incestuously took fees from major corporations and then graded those same corporations' debts far higher than they were entitled to receive, which misled investors as those same corporations declared bankruptcy in 2008, that left millions of investors once again holding the bag, is now going to lower the credit rating of the United States? Really?"(snip)

    (snip)"By lowering the rating of the U.S., S&P has subliminally placed a disincentive on the U.S. to maintain its military might since a ton of the U.S. budget and debt comes from its military spending. Again, this credit downgrade is an attack against the defense capability of the U.S. by putting pressure on Congress to appropriate less for military defense in order to reduce debt for a rating. The S&P has placed a loaded gun at the head of U.S. policymakers who deem in their wisdom, in a dangerous world, that it is in the best interests of the United States to have the strongest military on earth, to do good with it, to be policeman for the world. We have been providing this service for free for years, and now that comes back to bite us because of some numbers geeks in McGraw-Hill's ivory tower who do not have a clue?

    I hope the FBI is called to action against this threat. Congress better start hauling S&P executives onto Capitol Hill for some serious grilling."(snip)

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    I voted for Obama thinking that he HAD to be an improvement over Bush The Dim. Plus I just couldn't vote for another tired, old Republican unless his name was Ron Paul. I was sure he was smarter and less stubborn than G.W. I'm sorry but his press conference today was just the last straw. This idiot just doesn't get it. He doesn't have a clue what is going on.

    Obviously I am not alone, because AFTER he spoke the market starting going down even more than it already had been. It was the same old song he's been singing for over a month and nobody who knows anything about economics wants to hear it.

    I know the Dems are focusing on a sentence or two where S & P worried about gridlock in Washington but that is NOT why they downgraded our debt. They downgraded it because they doubt that Congress will do the necessary to REDUCE SPENDING !

    Moody's said today that they are ready to downgrade our debt IF we fail to cut spending. Neither rating agency said anything about tax increases. That is all Obama.

    Btw, remember how Tim "Turbo-Tax"Geithner said back in April that there was "Zero chance" of a downgrade ?

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    the phrase 'BarackALypse Now' is now popping up in some media. Indeed the dow did tank an additional 200 points while Obama was on national TV. Talking about tax increases while avoiding any serious talk about immediate gov't spending cuts has a tendency to do that !!!

    Next 'act' will be tomorrow as the FED makes their monthly statement ... which may very well include 'hints' of the rapid commencement of QE3.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    " In the run-up to this very financial crisis, for which our debt-creation machine at the Treasury Department ramped into overdrive, S&P was raking in fees for factory-stamping "AAA" approval on assets whose collateral was hemorrhaging value.

    That high-class rating was the criterion hurdle that allowed international cities, towns, and pension funds to scoop up those assets, and then borrow against them because of their superior quality, and later suffer devastating losses and bankruptcies when the market didn’t afford them the value that the S&P AAA rating would have implied.

    Perhaps this downgrade is S&P’s way of saying, we’re on it now—we’re not going to give bad debt a pass anymore. Earlier this week, it downgraded a bunch of Spanish and Danish banks that are sitting on piles of crappy loans. Then, of course, there was Greece.

    But just like Washington, the agency is missing the main reason for the recent upshot in debt. There’s a bar chart on the White House website that cites an extra $3.6 trillion of debt created during the Obama administration that is labeled for "economic and technical changes." That figure doesn’t include the $800 billion of stimulus money delineated separately, which is more deserving of that moniker.

    Recall, banks concocted $14 trillion of toxic assets that S&P rated AAA between 2003 and 2008—or higher in creditworthiness than it now deems the U.S. government to be. These banks now store $1.6 trillion of excess Treasury debt on reserves at the Fed (vs. about zero before the 2008 crisis) on which interest is being paid. In addition, the Fed holds $900 billion of mortgage-related assets for the banks. Plus, about half a trillion of debt is still backing some of AIG’s blunders, JPMorgan Chase’s takeover of Bear Stearns, the agencies that trade through Wall Street, and other sundries. That pretty much covers the extra debt since 2008—not that S&P mentioned this."
    http://www.thedailybeast.com/article...st+Articles%29

    If you go to the article there is a link to the White Houses website.

    There is alot going on that we are not made completely aware of.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    slightly off-topic but - yay! Just as I had expected after the credit rating downgrade USD has slightly appreciated - I think before Friday it was about to hit a low that I hadn't seen in a long time but now it's up 1-2 cents (against my euro-pegged currency)

    My joy will probably not last long if there really is QE3 underway it could make dollar go lower than ever before...?

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    There is alot going on that we are not made completely aware of.
    ^^^ wins award for 'understatement of the year !'. The US taxpayer is directly or indirectly 'on the hook' for toxic assets held by both US and foreign big banks, for Greek / Spanish etc. bonds via America's duties to the IMF, for derivatives held by AIG et al, for Freddie / Fannie / FHLB toxic mortgage paper ( which was also downgraded ), and probably for shaky state and municipal bonds, for underfunded state and municipal gov't worker retirement funds ...


    if there really is QE3 underway it could make dollar go lower than ever before
    the 'gold foil hat' crowd sees renewed money printing / QE3 as the only politically palatable alternative in the short to medium term.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Damn it's crazy out here. There's stuff happening in the markets I didn't even see in 2008.
    Last edited by person; 08-09-2011 at 03:48 AM. Reason: emphasis
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Melonie View Post
    ^^^ wins award for 'understatement of the year !'. The US taxpayer is directly or indirectly 'on the hook' for toxic assets held by both US and foreign big banks, for Greek / Spanish etc. bonds via America's duties to the IMF, for derivatives held by AIG et al, for Freddie / Fannie / FHLB toxic mortgage paper ( which was also downgraded ), and probably for shaky state and municipal bonds, for underfunded state and municipal gov't worker retirement funds ...




    the 'gold foil hat' crowd sees renewed money printing / QE3 as the only politically palatable alternative in the short to medium term.
    It's worse than that. The fact is that Fannie especially has been busy guaranteeing mortgages with maximum down payments of less than 4 % and a LOT of these "new" , post 2008 mortgages are already "distressed". Wtf is going on ? ! ? ! Well the short answer is Obama is the POTUS and lending to poor underprivileged including many blacks is not going to change on his watch. The facts are the facts. Barack didn't ask me what to do with Fannie and Freddie. If he had, I would have told him to shut them down and liquidate them ASAP. Take the short term pain in exchange for long term stability. Instead he chose to do the exact opposite.
    Last edited by Eric Stoner; 08-09-2011 at 10:51 AM.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    ^^^ while I can't go along with an outright 'racial' element, there is certainly ample information supporting a conclusion that there is a POLITICAL element. More specifically, the vast majority of 'low income' Americans support the Democratic party ... and Black American voters almost exclusively support the Democratic party. It is understandable that with the current 'moral hazard' situation, i.e. 'low income' Americans ( who are disproportionately Black ) receiving far more dollars worth of gov't funded benefits ( including de-facto subsidized mortgages via Fannie / Freddie / FHLA ) than they actually must contribute via income taxes to fund such gov't benefits, those 'low income' voters have everything to gain and nothing to lose by continuing to support Democratic politicians and policies that will keep those benefits flowing.
    l
    Circling back to the original thread topic, the apparent disingenuineness of the debt ceiling increase 'deal', i.e. President Obama and democrats in the Senate seeking the immediate debt ceiling increase authority with no real / serious intention of actually reducing gov't spending levels on social welfare / 'low income' subsidies, ( as well as setting up the last resort committee that will have to cut Social Security and Defense spending by default without touching social welfare / 'low income' subsidies ) is the arguable cornerstone of the S&P downgrade.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Melonie View Post
    ^^^ while I can't go along with an outright 'racial' element, there is certainly ample information supporting a conclusion that there is a POLITICAL element. More specifically, the vast majority of 'low income' Americans support the Democratic party ... and Black American voters almost exclusively support the Democratic party. It is understandable that with the current 'moral hazard' situation, i.e. 'low income' Americans ( who are disproportionately Black ) receiving far more dollars worth of gov't funded benefits ( including de-facto subsidized mortgages via Fannie / Freddie / FHLA ) than they actually must contribute via income taxes to fund such gov't benefits, those 'low income' voters have everything to gain and nothing to lose by continuing to support Democratic politicians and policies that will keep those benefits flowing.
    l
    Circling back to the original thread topic, the apparent disingenuineness of the debt ceiling increase 'deal', i.e. President Obama and democrats in the Senate seeking the immediate debt ceiling increase authority with no real / serious intention of actually reducing gov't spending levels on social welfare / 'low income' subsidies, ( as well as setting up the last resort committee that will have to cut Social Security and Defense spending by default without touching social welfare / 'low income' subsidies ) is the arguable cornerstone of the S&P downgrade.
    Thank you. You put it much better than I did causing me to edit my last post. We have enough problems without injecting race into this. I'll leave that to Reverend Wright, Maxine Waters, Sheila Jackson Lee not to mention Glen Beck and Sean Hannity.
    Last edited by Eric Stoner; 08-10-2011 at 07:04 AM.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Sometimes I read this stuff and I am so blown away I dont know what to say.

    The point I was trying to make is about 3.6 trillion in spending, verified by the white house, that has nothing to do with anything other then possible bail outs of large corporations.

    Yet some how it comes back to those pesky poor people and democrats.

    When are people going to wake up and realize it has nothing to do with a party or even economic status. They are robbing us all and dividing us by party to do it.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Vamp View Post
    When are people going to wake up and realize it has nothing to do with a party or even economic status. They are robbing us all and dividing us by party to do it.



    Oh yea.



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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Yet some how it comes back to those pesky poor people and democrats.

    When are people going to wake up and realize it has nothing to do with a party or even economic status
    ... probably at the point when it actually became true. In the meantime, it is in fact the democrats who are advocating an increase in the debt limit, who are advocating new / higher taxes on virtually all Americans, and who are NOT advocating meaningful cuts in social welfare / medicaid / 'low income' subsidy spending.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Melonie View Post
    ... probably at the point when it actually became true. In the meantime, it is in fact the democrats who are advocating an increase in the debt limit, who are advocating new / higher taxes on virtually all Americans, and who are NOT advocating meaningful cuts in social welfare / medicaid / 'low income' subsidy spending.
    Even a few "conservative" economists, who ought to know better, are now saying that Congress ought not to cut too much, too fast from the budget fearing a repeat of 1937. Yes, FDR got religion after his reelection in 1936 and tried to balance the budget. What everyone forgets is that in addition to cutting spending, the dummy raised taxes AND The Fed cut the money supply. Those are the real reasons for the Great Recession of 1938. If you suck money out of the private sector you will depress economic activity and likely get a recession.
    Last edited by Eric Stoner; 08-15-2011 at 06:55 AM.

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    Default Re: weekend commentary - S&P downgrades US Gov't Debt !!!

    Quote Originally Posted by Melonie View Post
    ... probably at the point when it actually became true. In the meantime, it is in fact the democrats who are advocating an increase in the debt limit, who are advocating new / higher taxes on virtually all Americans, and who are NOT advocating meaningful cuts in social welfare / medicaid / 'low income' subsidy spending.

    And spending was increased originally by Bush. Blah Blah Blah

    Once again where is the out rage about the $3.6 trillion spent on corp bail outs???? The money sent to over seas banks etc????

    If the real problem was "entitlement" programs then why havent we had this problem sooner? There is other spending going on ie war and bailouts that have accounted for the largest increases in spending over the past decade. The banks are basically holding us hostage by making us pay for their debt.

    Blame who ever you want but we are falling down a black hole with no end.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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