S&P downgrades US right at the TL

so an automatic sell off in treasuries is ensured....but it is knee jerk... we will have low low rates in US for a long time even as US rating falls to perhaps A+ in time...This could create market mayhem as algorithms get confused massively as bonds as well as stocks sell off monday.....could be may 6th kinda day..

Edited by andiron, 05 August 2011 - 07:53 PM.

The write down will likely confuse most traders, but bond traders have expected this event. In fullness of time this will be seen as mostly a gross expense to the taxpayer who must pay the increased interest costs of all the short term debt that must be rolled over. Some will also notice that there is a shortage of bonds that meet investment covenants requiring AAA securities in certain types of retirement bank and insurance indentures. This means that AAA local debt and corporate debt will eventully see growth in demand. The corporations borrow in the USA and invest off-shore and keep the earnings off-shore while paying their USA creditors in inflated dollars. Everyone cheats the poor stupid US taxpayers, Overall, it is difficult to see that anyone wins from this exercise by a deeply flawd rating agency arriving late at scene of the crimes it helped commit. Best, Islander

Edited by Islander, 05 August 2011 - 08:13 PM.

Excellent comments Islander, did S&P ever speak up when the govt has been racking up the debt year after year? Now they came and downgraded as if the whole mess can be fixed overnight. All in the name of cleaning their reputation that they destroyed during the housing bubble and the govt had to absorb their stupidity that they now deem appropriate to downgrade. Hypocrisy of Wall Street must end, the players of this financial system have gone too far. Very Best...

Edited by arbman, 05 August 2011 - 08:25 PM.

so an automatic sell off in treasuries is ensured....but it is knee jerk...
we will have low low rates in US for a long time even as US rating falls to perhaps A+ in time...This could create market mayhem as algorithms get confused massively as bonds as well as stocks sell off monday.....could be may 6th kinda day..

In this case it's sell the rumor and Buy the news. That's why market had the fast and huge sell-off recently. It should have been priced in already. Now for some the question is where the re-shuffled money will go? For me, I see blue chip stocks are the place to go, especially with this depressed prices.

Edited by redfoliage2, 05 August 2011 - 08:42 PM.

Who is going to rate S&P! Do they do self rating?

so an automatic sell off in treasuries is ensured....but it is knee jerk...
we will have low low rates in US for a long time even as US rating falls to perhaps A+ in time...This could create market mayhem as algorithms get confused massively as bonds as well as stocks sell off monday.....could be may 6th kinda day..

In this case it's sell the rumor and Buy the news. That's why market had the fast and huge sell-off recently. It should have been priced in already. Now for some the question is where the re-shuffled money will go? For me, I see blue chip stocks are the place to go, especially with this depressed prices.

Red, I would think we will get some sort of sell off to conclude the 5th of 5th type of selling, I still see 1150 visited, well unless we get a panic and really go down to 1000 or something...

so an automatic sell off in treasuries is ensured....but it is knee jerk...
we will have low low rates in US for a long time even as US rating falls to perhaps A+ in time...This could create market mayhem as algorithms get confused massively as bonds as well as stocks sell off monday.....could be may 6th kinda day..

In this case it's sell the rumor and Buy the news. That's why market had the fast and huge sell-off recently. It should have been priced in already. Now for some the question is where the re-shuffled money will go? For me, I see blue chip stocks are the place to go, especially with this depressed prices.

Red, I would think we will get some sort of sell off to conclude the 5th of 5th type of selling, I still see 1150 visited, well unless we get a panic and really go down to 1000 or something...

Now money needs to get out of T-bonds and I don't know if the market operators will let stocks to drop that low. "They" have been preparing for this for the past two weeks. I think dips will get bought Monday.

Edited by redfoliage2, 05 August 2011 - 09:44 PM.

The money cannot get out of T-Bonds SO MUCH when we are headed into a recession, the stocks will drop instead, it has already been dropping, unless this is now priced in, entirely possible. The market knew, so I am thinking a knee jerk reaction to news to the downside and then a reversal...

The credit rating agencies had a series of downgrades of Japan from 1998 to 2002; notice the impact on Japan's govt debt -




Terrifying, yes? Yea, sure.

I would like to believe that this might provide a turning point in people's understanding of our monetary system, but it's pretty clear that it's not just about complete ignorance and stupidity, its about deeply held belief systems that while they feel intuitively correct are simply wrong. The false belief system is held by the vast majority of people on all sides of the political spectrum, at all educational levels, at all income and wealth levels. I believe that something much much more severe will need to happen, akin to the 1930s, to break through those belief systems. Otherwise, I think we muddle along, and hope for the best.

This event? ey, no big deal. Investors don't like uncertainty so there'll likely be some gyrations - as traders that should put a smile on your face. Much more hyperactive, of course, will be all the political posturing and finger-pointing; talking heads on TV will milk this for at least a few days. But when the dust settles, we be turning Japanese - rates near rock bottom, trying to get our currency down relative to trading partners, people clinging to the gold ponzi scheme, most not having a clue.

Oh, if you want to know if you are one of the exceedingly few enlightened ones, take a look at this -

http://www.usdebtclock.org/

- if that scares you or even if you just complain about it ----- you're not.

Edited by salsabob, 05 August 2011 - 09:59 PM.

The credit rating agencies had a series of downgrades of Japan from 1998 to 2002; notice the impact on Japan's govt debt -




Terrifying, yes? Yea, sure.

I would like to believe that this might provide a turning point in people's understanding of our monetary system, but it's pretty clear that it's not just about complete ignorance and stupidity, its about deeply held belief systems that while they feel intuitively correct are simply wrong. The false belief system is held by the vast majority of people on all sides of the political spectrum, at all educational levels, at all income and wealth levels. I believe that something much much more severe will need to happen, akin to the 1930s, to break through those belief systems. Otherwise, I think we muddle along, and hope for the best.

This event? ey, no big deal. Investors don't like uncertainty so there'll likely be some gyrations - as traders that should put a smile on your face. Much more hyperactive, of course, will be all the political posturing and finger-pointing; talking heads on TV will milk this for at least a few days. But when the dust settles, we be turning Japanese - rates near rock bottom, trying to get our currency down relative to trading partners, people clinging to the gold ponzi scheme, most not having a clue.

Oh, if you want to know if you are one of the enlightened ones, take a look at this -

http://www.usdebtclock.org/

- if that scares you or even if you just complain about it ----- you're not.

Investors are used to think US bonds are safe haven, but no more. Many corporates have more cash than US government. So, those company stocks should be more attractive now.

Edited by redfoliage2, 05 August 2011 - 10:02 PM.