Archive - Aug 6, 2011
TWiSTeD PLaNeT oF THe APeS
Submitted by williambanzai7 on 08/06/2011 22:28 -0500I'm no better than the animals sitting in the zoo man..
Guest Post: Equities In Dallas And Sovereign Debt Ratings
Submitted by Tyler Durden on 08/06/2011 21:33 -0500“Equities in Dallas” was the worst job a trainee at Salomon brothers could get. I have to believe that the G-20 sovereign debt rating group was the equivalent at the rating agencies. It wasn’t volatile and sexy like Emerging Markets. It had nothing to do with the core business of rating corporate debt. It had even less to do with the fast growing structured product business. It must have been a pretty dull place to work. I think that is important because it means, certainly at this stage that all the decisions on sovereign debt are being made at a very high level within the rating agencies. Someone isn’t running some numbers and coming up with a rating proposal. Some people are sitting around in a room, trying to figure out what rating they want to give, or need to give, or can get away with giving. Knowing that these decisions are being made at the highest levels of the firm and have nothing to do with what any analyst in the area says or does is important in trying to figure out where the ratings go next.
Speaking Of "Credibility", Here Is The CBO's 2001 Forecast Which Predicted Negative $2.5 Trillion Net Debt In 2011
Submitted by Tyler Durden on 08/06/2011 21:02 -0500While we reserve judgment for S&P's effectiveness at being accurate in anything they do (they are, after all a rating agency and as such they goal seek results to comply with what their paying groupthink seeking customers demand), we would like to redirect to the modest topic of CBO predictive efficiency (the organization that is at the basis of the current credibility spat between Treasury and S&P, and which, incidentally has created the baseline forecast against which the debt ceiling compromise plan is supposed to cut $2.1 trillion over the next decade), by pointing out according to the same CBO in 2001, net US indebtedness in 2011 would be negative $2.436 trillion, the ratio of debt held by the public to GDP would be 4.8%, total budget surplus would be $889 billion, and GDP would be $16.9 trillion. We won't comment on the error interval in CBO forecasts when compared to actual 2011 results, and we most certainly won't comment on the idiocy of the Treasury chastising someone, anyone, for erring, or disputing, forecasts.
Citizen Warrior Video of Washington AG Rob McKenna's Press Conference Aug 5, 2010, Announcing Lawsuit Against Recontrust (BofA)
Submitted by 4closureFraud on 08/06/2011 20:45 -0500Thank you to Citizen Warrior, Karen P, for recording this historic event and for making it happen! McKenna starts out with "We are suing ReconTrust a subsidiary of Bank of America, for conducting illegal foreclosures on THOUSANDS of Washington homeowners." Strong!
Food Stamps and The Government’s Last Put
Submitted by ilene on 08/06/2011 20:30 -0500The market may be beginning to reflect not only a financial crash, but an economic one that has been under way since May.
Tottenham Burning - Live Feed
Submitted by Tyler Durden on 08/06/2011 20:01 -0500
Watch the Skynews webcast from Tottenham whose mains street is currently up in flames not due to a victory over Man U, but after rioting and looting broke out earlier to supposedly express anger over the accidental shooting of a man on Tuesday, although nobody is really sure for the reasons.
As Treasury Continues Childish Sniping At S&P While Losing Credibility, Investors Lose Sleep
Submitted by Tyler Durden on 08/06/2011 19:49 -0500Today at about 4 pm, the Treasury's John Bellows issued a hastily written statement, in which he explained why in his view, a day after a historic downgrade of its debt, the $2 trillion mistake that S&P made "raises fundamental questions about the credibility and integrity of S&P’s ratings action." What is ironic is that in the explanation, it is the Treasury's own credibility that is put at stake. Supposedly the reason for the mix up is as follows: "S&P incorrectly added that same $2.1 trillion in deficit reduction to an entirely different “baseline” where discretionary funding levels grow with nominal GDP over the next 10 years. Relative to this alternative “baseline,” the Budget Control Act will save more than $4 trillion over ten years – or over $2 trillion more than S&P calculated. (The baseline in which discretionary spending grows with nominal GDP is substantially higher because CBO assumes that nominal GDP grows by just under 5 percent a year on average, while inflation is around 2.5 percent a year on average." So let's get this straight: the Treasury department is kicking and screaming at S&P for daring to downgrade the US, when it is using as its baseline a forecast prepared by the same CBO which back in 2001 predicted a net negative debt balance by 2008 (!), and which in the same year expected 2011 US GDP to be $16.9 trillion, and a budget surplus of about $1 trillion, putting any S&P forecast from the peak of the credit bubble, to shame, but far more importantly, Bellows, and his plethora of bosses, is pissed that the S&P did not use a baseline that assumes a 5% GDP annual growth, when current annualized GDP, 2 years after the end of the recession, is under 2%? And this is what is supposed to make S&P less than credible? This is like the pot and the kettle having commenced global thermonuclear warfare.
S&P Downgrades US to AA+ - Tied With Belgium!
Submitted by ilene on 08/06/2011 19:24 -0500Even today, the price of insurance on a government default has been higher than that for Colgate Palmolive, the global toothpaste giant, which has a rating two notches below AAA.
ECB As European Lender Of Last Resort = Institutional Purveryor Of A Pan-European Ponzi Scheme
Submitted by Reggie Middleton on 08/06/2011 15:33 -0500If today's broad market action is confusing you, it shouldn't be.
We Warned You About S&P Too
Submitted by Econophile on 08/06/2011 13:33 -0500We told you the downgrade was coming, too.
BaNzai7's MeMoRieS oF TiMMaH THe ZoDiaC
Submitted by williambanzai7 on 08/06/2011 13:11 -0500Tick, tick, tick...
The Official Calls For Change Roll In: "Fire Geithner"
Submitted by Tyler Durden on 08/06/2011 12:51 -0500The first official demand for a change at the top as a result of the S&P downgrade has come in, courtesy of Indiana State Treasurer Richard Mourdock, who has just demanded the head of the most incompetent and tax evading Treasury Secretary in US history, on a silver platter. "President Obama should fire U.S. Secretary of the Treasury Tim Geithner over the debt downgrade. If Obama won't remove him, then the US Senate should withdraw its consent of Geithner's appointment to U.S. Treasury because someone in the White House needs to be held responsible for this disaster." Zero Hedge fully endorses this perspective.
Emergency Meetings Galore: ECB To Hold Crisis Conference Sunday, G20 To Hold Call At 2230 GMT Tonight
Submitted by Tyler Durden on 08/06/2011 12:43 -0500For a world that has supposedly largely priced in the US downgrade, the amount of emergency conference calls this weekend is a little disturbing. First, tonight at 22:30 GMT the G20 deputy finmins will hold a conference call It to "exchange of information and opinions." Next tomorrow sometime the ECB will hold a separate call in "response to the latest developments in the euro zone's debt crisis, an ECB source said on Saturday." Somehow we think the tangential topic of the historic US downgrade may also be breached. And, as always, the market is sure to be delighted with the outcome of this latest political hodge podge of responses to what is increasingly shaping up like a market perfect storm of epic proportions.
Goldman Cuts S&P 500 Price Target, Charts The Market's 10% Correction
Submitted by Tyler Durden on 08/06/2011 12:32 -0500
Like clockwork, the Wall Street reactionaries confirm that when it comes to predicting the future, and/or actually having a proactive stance, one better look elsewhere. In responde to last week's 10% correction, first Goldman's economics team downgrades the economy and floats its demands for the SS QE3, next its FX teams downgrades the USD, and finally Joseph Cohen replacement David Kostin cuts his price target on the S&P. To wit: "We reduce our year-end 2011 price target to 1400 from 1450 and our 2012 EPS estimate to $102 from $104, due to lower global GDP growth estimates. Our 2011 EPS estimate remains unchanged at $96. S&P 500 trades 12% below its April peak and has experienced its 15th correction of at least 10% since 1975 reducing the forward P/E to 12.0X our top-down EPS estimates and 11.3X consensus bottom-up estimates. Current valuation is consistent with support levels in October 2008, July 2010 and our uncertainty-based P/E fair value, suggesting further risk is more likely reliant on negative earnings revisions than further multiple contraction." We can only hope that at least someone knows what Wall Street's sell side is paid millions of dollars for. Alas, it is not us.
It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden
Submitted by Tyler Durden on 08/06/2011 11:20 -0500Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.
- German Govt: Italy Too Big For EFSF To Save - Spiegel
- German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
- German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel
- Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel
- German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel








