8/8/11 and the big "meh"

[RandyFolds]

Morons are like roaches.  You can step on millions of them but they always come back.

The more you step on, the smarter the average roaches become...if only this is how it worked in irl...

European default still seems much more likely in medium term.

This will spur China to start squawking a bit more about a new reserve currency. Whether or not they actually start selling dollars remains to be seen.

I think what prompted downgrade was not fundamentals (those have always been crappy) but the fact that the political process to get debt ceiling raised was so dysfunctional and default was actually floated as a legitimate possibility.

There is no safe haven at the moment, where are people going to move that much money anyway? Expect a PM pop and $2k target by fall for AU.

A nice thought, but trying to drive the main importer of your goods out of business is not in any way, shape or form what they want to do. As others have said, when the US goes down, it's taking the whole world with it, except for lemonginger in his mountain compound fueled by hippy.

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[marvinmartian]

Everything is going to be fine folks.  That was the main point of this post actually.  The markets have moved way more than they needed to in response to basically a non-event.  S&P are a bunch of idiots, we all know that.  Unfortunately, so are many members of congress.

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

[The_JMiner]

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

It is a bit ignorant to blame this all on one group imo. The United States has been on this downward spiral way before the Tea Party and will continue if we do not fix out mess even without the tea party. Just my .02

[marvinmartian]

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

It is a bit ignorant to blame this all on one group imo. The United States has been on this downward spiral way before the Tea Party and will continue if we do not fix out mess even without the tea party. Just my .02

The fact remains that they were responsible for the "Grand Compromise" not going through.  That led to the panicked deadline and left us where we're at now.  The market would have continued up-and-down but now it's spooked (being something based on mass psychology). 

Nevermind the fact that combined they have an IQ of a potato.

[RandyFolds]

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

It is a bit ignorant to blame this all on one group imo. The United States has been on this downward spiral way before the Tea Party and will continue if we do not fix out mess even without the tea party. Just my .02

The fact remains that they were responsible for the "Grand Compromise" not going through.  That led to the panicked deadline and left us where we're at now.  The market would have continued up-and-down but now it's spooked (being something based on mass psychology). 

Nevermind the fact that combined they have an IQ of a potato.

http://thinkprogress.org/romm/2011/08/08/290508/michele-bachmann-pledges-to-have-the-epa%e2%80%99s-%e2%80%9cdoors-locked-and-lights-turned-off%e2%80%9d/

Potato indeed.

[evoorhees]

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

It is a bit ignorant to blame this all on one group imo. The United States has been on this downward spiral way before the Tea Party and will continue if we do not fix out mess even without the tea party. Just my .02

The fact remains that they were responsible for the "Grand Compromise" not going through.  That led to the panicked deadline and left us where we're at now.  The market would have continued up-and-down but now it's spooked (being something based on mass psychology). 

Nevermind the fact that combined they have an IQ of a potato.

So you're saying that the US credit rating got downgraded due to the one political faction in America that is actually the most vocal about debt reduction? And then you compare the entire faction to a potato - ignoring the probably reality that such a large group is necessarily composed of people from a wide range of intelligence, background, and character?

The US credit rating got downgraded because the US is not credit worthy. It's pretty simple. The downgrade should have happened long ago, actually. The amount of debt carried by the US Federal Government cannot mathematically be paid back without printing the money to do so (which they've already started doing via "quantitative easing").

You seem to suggest that the creditworthiness of the country would be improved if the group advocating for "smaller government, less spending" was gone, thereby leaving more people who support higher spending levels? Perhaps you want to rethink your opinion on this.

[miscreanity]

So you're saying that the US credit rating got downgraded due to the one political faction in America that is actually the most vocal about debt reduction? And then you compare the entire faction to a potato - ignoring the probably reality that such a large group is necessarily composed of people from a wide range of intelligence, background, and character?

The US credit rating got downgraded because the US is not credit worthy. It's pretty simple. The downgrade should have happened long ago, actually. The amount of debt carried by the US Federal Government cannot mathematically be paid back without printing the money to do so (which they've already started doing via "quantitative easing").

You seem to suggest that the creditworthiness of the country would be improved if the group advocating for "smaller government, less spending" was gone, thereby leaving more people who support higher spending levels? Perhaps you want to rethink your opinion on this.

I think the political element is irrelevant as well - the dog and pony show that entertains and distracts while reckoning is delayed.

A major aspect of the downgrade by S&P could also be that the rating agencies have been in the spotlight recently and in danger of being declared pointless for having waited so long after the obvious to take action. This could have been an effort to regain some semblance of validity in the eyes of the financial community despite being too little, too late.

In doing so, S&P has pissed off government and I have to wonder whether further downgrades of the US among the rating agencies will run the risk of nationalization in some form. As absurd as it sounds, I wouldn't put anything past a desperate politician.

[HappyFunnyFoo]

The downgrade theoretically would have caused selling pressure on treasuries.  Instead, there was a ton of U.S. treasury buying!  Record low interest rates, instead of increasing rates.  Who could've predicted that? Last week was a great time to buy undervalued banks and mezzazine debt companies due to the illogical nature of selling pressure.

Since it's unconstitutional to question U.S. debt, and the U.S. has unlimited printing power (the treasury can mint $5t platinum coins even if Congress has a stick up its ass thanks to LibertarianDumbDumbs), I'd agree with Warren Buffett's assessment of U.S. debt as "AAAA".

[miscreanity]

The downgrade theoretically would have caused selling pressure on treasuries.  Instead, there was a ton of U.S. treasury buying!  Record low interest rates, instead of increasing rates.  Who could've predicted that? Last week was a great time to buy undervalued banks and mezzazine debt companies due to the illogical nature of selling pressure.

Yes, the assumption would've been that there'd be pressure on treasuries. The reality is that algorithmic trading moves funds around and will park them in treasuries by default when other asset classes are declining. Automated trading technologies are not so sophisticated yet as to make much better than well-defined conditional decisions based on economists' assumptions.

As the dollar and equities were falling off a cliff, the money thus moved into treasuries. Once a technical breach occurs, the cascade is triggered. The banks and PPT use this fact to great effect in order to sustain the illusion of success.

Since it's unconstitutional to question U.S. debt, and the U.S. has unlimited printing power (the treasury can mint $5t platinum coins even if Congress has a stick up its ass thanks to LibertarianDumbDumbs), I'd agree with Warren Buffett's assessment of U.S. debt as "AAAA".

That's a very centric perspective. It might be a sin for those in the US to go against the grain, but that does nothing for the rest of the world. An egotist may view himself as hot shit while everyone around him sees right through the boasting and is laughing at his idiocy. America has become a laughing stock, but still carries enough weight to cause damage - a demented madman with an arsenal.

[marvinmartian]

So you're saying that the US credit rating got downgraded due to the one political faction in America that is actually the most vocal about debt reduction? And then you compare the entire faction to a potato - ignoring the probably reality that such a large group is necessarily composed of people from a wide range of intelligence, background, and character?

No, that's not what I'm saying.  I'm saying the histrionics and media news cycle grabbing that the Tea Party cultivated as part of the "debt ceiling discussion" damaged the market by spooking traders and pushing price levels below their normal trend.  That was the real damage, NOT the S&P rating.  Nobody cares about S&P.  If they did, they wouldn't have bought so many of those downgraded bonds.

NOTE:  we're already back to "pre S&P downgrade" levels.  That's proof of it's "meh" ness.

The debt ceiling has been raised regularly since 1919.  

     http://usgovinfo.about.com/od/federalbudgetprocess/a/US-Debt-Ceiling-History.htm

The Tea Party chose to make it an unreasonable debate.  The "Grand Compromise (GC)" that Obama and Boehner were set to sign would have lowered the debt without SINKING the market.  They (TP) stopped it.  They (TP) are to blame.  The bill that eventually got passed is WORSE than the GC that was slated to pass.

     http://thehill.com/blogs/blog-briefing-room/news/170551-boehner-backing-away-from-grand-compromise-on-debt

What the TP and the media who give them air time fail to recognize is that this really isn't a TV reality show.  It's the economy.  It's government that should be FOR the people.  It's about people's lives.

The US credit rating got downgraded because the US is not credit worthy. It's pretty simple. The downgrade should have happened long ago, actually. The amount of debt carried by the US Federal Government cannot mathematically be paid back without printing the money to do so (which they've already started doing via "quantitative easing").

We're more credit worthy than anyone else.  Scary, but true.

You seem to suggest that the creditworthiness of the country would be improved if the group advocating for "smaller government, less spending" was gone, thereby leaving more people who support higher spending levels? Perhaps you want to rethink your opinion on this.

The logic behind that statement is severely flawed:

if (A)
then (B)
does not imply
if (!B)
then (@^$@#%&)

The Tea Party doesn't really advocate anything concrete.  They're like infants babbling nonsense.  They think Evolution is a "theory" and that dinosaurs roamed the earth six thousand years ago.  They are a media branch of the Republican Party, which stands for huge corporate profits.  Smaller government means that corporations (like Enron, Exxon, British Petroleum, Lehman Brothers, etc...) and the like would be free to do whatever they want.  

Are you willing to put your children to work at age 7?  Have you even heard of child labor laws?  How about the EPA?

You may want to re-read your history of Capitalism ... or more likely ... just read it for the first time.  While I wouldn't consider this the best history lesson, it does have the virtue of being free:

     http://en.wikipedia.org/wiki/History_of_capitalism

Hope you enjoy.