The REAL Problem With The Downgrade.
Note that since the “downgrade” rumors started the ten year treasury yield has dove. You’d think it would do the opposite. You’d be wrong.
The issue with the downgrade is not the fundamental risk of holding Treasuries. The difference between “AAA” and “AA+” is nearly immaterial.
Rather, the problem is the capital calls it may generate within the banks and the impairment against the ability to raise capital from stock price declines.
Anyone else seeing the big pic? Volatile is just a smidgeon of what we could see. Read the entire piece. BTW, someone made money off the downgrade.
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August 8, 2011 at 6:16 pm
It’s all Greek (default) to me McN.
From that article…..
Who ‘made $10bn on 10/1 bet that U.S. credit rating would be downgraded’?
* Unknown investor or hedge fund ‘made $850million bet’
* Bet in futures market reportedly done at odds of 10/1
* George Soros made similar bet on currency in 1992
* But source says he wasn’t involved in rumoured trade
By Mark Duell
A mystery investor or hedge fund reportedly made a bet of almost $1billion at odds of 10/1 last month that the U.S. would lose its AAA credit rating.
Now questions are being asked of whether the trader had inside information before placing the $850million bet in the futures market, or if the bet happened at all.
There were mounting rumours that investor George Soros, 80, famously known as ‘the man who broke the Bank of England’, could be involved.
August 8, 2011 at 6:26 pm
Well shit if I had billions to invest I’d have bet on us being downgraded too! It’s so very useful politically for each side (that is in reality the same side) to squawk “it’s all your fault!”; & the downgrade does not really affect those that need AAA credit because they can still get that rating from the other 2 ratings agencies.
Anyone who does not think the entire market from top to bottom is rigged is simply delusional. All that will happen is there will be more “austerity” (that is, poverty for the 99%ers), to save the markets (that is, improved bonuses for the 1%ers).
The only thing I want to hear about the goddamned market is how the futures in pitchforks is looking.
August 8, 2011 at 7:11 pm
Will they take a chit?
Obama likes to give lots of chits.
http://dictionary.reference.com/browse/chit
August 8, 2011 at 7:25 pm
Sure, he takes all kinds of chits: Soros’ chit, Pritzker chit, al Khalidi chit, William Ayers chit, Rezko chit; he is equal opportunity chit, and that is a fact.
But he only gives a chit to the right people
August 8, 2011 at 8:02 pm
http://www.ianwelsh.net/comments-on-the-sp-downgrade/
Best short summation of the import & impact of the downgrade.
August 8, 2011 at 8:26 pm
Very interesting article Nom.
Hmmmmmmm………………. to quote….
” 5. The US has effectively unlimited drawing rights from the IMF. Those drawing rights mean that if any of the core economies have an AAA rating, in effect, so does the US. (ie. if Germany is AAA, so is America.)
6. S&P knows all this. They are doing this because they know the President and Congress and the real people in the oligarchy want it done. Remember, a downgrade increases rates, and that is a direct increase to their income. And they know the US can pay, they aren’t fooled by idiotic talk about a default. The US may default at some point, but that will be a political decision.
7. This is another manufactured crisis, on top of the original manufactured debt ceiling crisis. The oligarchy wants the opportunity to buy federal assets at dimes on the dollar. They believe they don’t need the poor or middle class anymore, so they are good with getting rid of SS and Medicare. And Obama is, as he always has been, onside with this.
These people, are, however, playing with fire. Just because it’s a crisis that didn’t have to happen, a crisis, that is manufactured as another looting opportunity, doesn’t mean that it won’t have real consequences.”
August 9, 2011 at 8:26 am
Nom thanks for the link very interesting. Also, lots of information in the comments with several links!!
August 8, 2011 at 8:06 pm
Whateve the financial consequences, the attack on America’s morale is glaring.
August 8, 2011 at 8:20 pm
From Noel Shepard:
“…. ignored in his piece is that the nation made a huge turn to the left in 2006 and 2008 in the hopes that the imposition of non-Republican views would improve America.
When the Democrats took over Congress in January 2007, unemployment was 4.4 percent. It is now 9.1 percent.
The budget deficit created by the outgoing Republican Congress was only $161 billion. It is now $1.6 trillion.
The total outstanding debt in January 2007 was $8.7 trillion. It is now $14.6 trillion.
And, before the Democrats took control of everything, America’s credit rating was AAA. It is now AA+.
If Page thinks Americans are going to look at what’s happened in the past four years and blame it all on the Tea Party I’ve got some swampland in Florida I’d like to show him.
Read more: http://newsbusters.org/blogs/noel-sheppard/2011/08/07/clarence-page-tea-party-over#ixzz1UUwZm3HN
August 8, 2011 at 10:42 pm
Many thanks, Dear B, for the facts. I can now tell my obot cousin why he’s full of crap.
August 9, 2011 at 8:35 am
Mary, pass this one along.
http://www.thedailybeast.com/articles/2011/08/07/hillary-clinton-2012-calls-grow-with-anger-at-obama-debt-capitulation.html
August 9, 2011 at 12:50 pm
Love that McN!!!!!
Great!
From that article.
“Hillary Told You So”
As Democratic disgust with Obama’s debt fumbling spreads, Clinton supporters recall her ’3 a.m. phone call’ warnings—and angry, frustrated liberals are muttering that she should mount a 2012 challenge.”
August 9, 2011 at 5:18 pm
McN,
Buttered,
When Bahmann wins in Iowa in a few day, the Dems may think about HRC as an antidote. That will be the Democrats, not the obamacrats.
August 9, 2011 at 3:30 pm
http://www.cnbc.com/id/44058747
Fannie Mae and Freddie Mac downgraded to negative tripleA
I refinanced my house this year and my mortgage servicer sold my loan to FM. I hate banks. I do not in any way have a subprime mortgage or bad credit fwiw.
August 9, 2011 at 3:31 pm
http://www.bloomberg.com/news/2011-08-07/muni-market-prepares-for-loss-of-aaa-ratings-as-s-p-downgrades-u-s-credit.html
munis also toasted
August 9, 2011 at 4:17 pm
Laugh of the day.
“A witness to his driving abilities described his (Obama) golfing skills as similar to that of comedian Tim Conway’s character, Dorf.”
August 8, 2011
President Priss
By Mark Hyman
August 9, 2011 at 5:19 pm
the putz-in-chief
August 9, 2011 at 9:06 pm
Excellent.
August 9, 2011 at 8:56 pm
King Putt…..Sir Golfs Alot and all that jazz. I’d rather him fiddle while Rome burns that way his worthless cronies would be tortured along with the rest of us.
So what does everybody think about the Fed today?? Stating they intend to keep interest rates this low for two more years…….gosh that just speaks volumes……they’re soooooo confident we’re recovering…NOT!
August 9, 2011 at 9:05 pm
We are all quite upset over how they play with our lives Somebody. It’s quite casual for them to wreak havoc on us peons. You know that FLOTUS is on vacay again right? Of course at the tax payer’s expense. It’s so gross.
August 9, 2011 at 10:14 pm
Somebody torched their vacation house on Martha’s Vineyard
http://www.thedailybeast.com/cheats/2011/08/09/fire-at-obamas-vacation-house.html
August 11, 2011 at 9:10 am
Isn’t that like her 59th two-week taxpayer paid vacation so far?
Michelle’s got more vacations than Heinz has varieties….
August 11, 2011 at 9:49 am
She took off on AF 2 with one kid and the mother. She’s visiting her bro in Seattle. Yeah, it’s on the taxpayer’s dime.
August 11, 2011 at 9:55 am
Maybe it will crash in the wilderness over the Rockies. It would make a great made for tv series: the Yeti and her spawn trudging back to (what passes for) civilization. Lol, they could fight a bear one week and illegal loggers the next. For the finale the Yeti could duke it out with ELF as they torch a gated community in Aspen.
August 11, 2011 at 1:59 pm
Seriously Nom, you could write a nice screenplay.
August 9, 2011 at 9:22 pm
http://4.bp.blogspot.com/_NyweekGbqX4/SkQxasbrcTI/AAAAAAAAArM/ZBHF8cEj_nA/s400/Obama_Cloning.jpg
lol all he needs is a putter for a staff