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Geithner Hints At State Bailout; Says "There Is No Way [A US Downgrade From AAA] Is Going To Happen"
Just reading between the headlines:
ROMER: STATE, LOCAL BUDGETS TO REMAIN 'VERY VERY BAD'
GEITHNER: V.STRONG CASE FOR ASSISTING STATES ON SIGNIF SCALE
GEITHNER: NEED REFORMS FOR STRONGER ECONOMY IN THE FUTURE
GEITHNER: NEED TO CONTINUE TO REINFORCE ECONOMIC EXPANSION
In other news Geithner warns just who makes the pink slip decisions over at Moody's. From Market News.
U.S. Treasury Secretary Timothy Geithner declared Tuesday there is "no way" the United States is going to lose its 'AAA' credit rating, arguing that policymakers just need to show that they possess the will to make "tough" fiscal choices.
In testimony before the House Appropriations Committee -- alongside CEA's Christina Romer and the OMB's Peter Orszag -- Geithner was asked about the recent Moody's report and the likelihood of the U.S. losing its 'AAA' rating. "There is no way that's going to happen," he replied. "There's not a chance that's going to happen to this country."
Still, he warned, future growth will be weaker if policymakers do not do a better job over time to demonstrate that they are able to make tough choices.
This is why the recently created fiscal commission is so important, Geithner said.
Anyone who cares about the U.S.'s long-term fiscal condition, Geithner told the panel, also has to care a lot about getting the
economy back on track and repairing the damage caused by the recession."If we don't achieve that, then our long-term fiscal problems will be much more difficult," he said.
He added that if Congress were to act on the budget proposals of the Obama administration -- such as healthcare reform -- it would result in a "dramatic" improvement in the U.S. fiscal position.
This will not solve everything, Geithner continued, not with the U.S. still facing long-term unsustainable growth in the committment of
the governments -- which is why healthcare reform is needed.
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If Moody's does something like that to America, they will be out of business soon after.
They are paid by people issuing bonds to rate bonds. That is a conflict of interest that ensures that they'll never do their job until it's much too late.
Agree, it's pure politics, I don't see any agency downgrade America. A downgrade in America could cause tremendous ripple effect on their "other" rating businesses as well.
Sure, America will keep its AAA rating, however they will introduce a new level called AAAA...
We're Americans and history don't apply to us!
I doubt the Chinese govt is all that bothered by what Moodys says about tbonds beyond how the rating affects the ability to Chinese to trade that paper for something else.
Treserve is going to keep buying its own paper, so Treserve's purchases aren't going to be bothered by Moodys.
Maybe Moodys should go into the movie rating business--where their appreciation of fiction can be put to better use.
Liar liar, pants on fire
who believes the words of a tax cheat?
"who believes the words of a tax cheat?"
Everyone who depends on the tax cheat to keep the Ponzi going for another week, month, year, decade. When everyone has been placed on the Titanic (which is what's going on by placing all debt on the public purse) everyone has two choices. Die now or die later.
The decison is obvious and precisely why this Ponzi will last much longer than most people could imagine.
Or it will come tumbling down faster than anyone could imagine.
I can see it going either way but have postioned myself for a Madoff
type ponzi collapse....
Got Lead?
Got training?
In shape?
I fully agree it will tumble down very quickly. But it will last much longer than expected before it does collapse precisely because so many people will want it to last longer than expected. It's amazing how long a group of people can keep the rising water back, right up until they can't.
Crashing Towards a New World Order - R.K.Moore
http://www.marketoracle.co.uk/Article17568.html
heavy read but worth the time, WOW†
Thanks for the pointer. I read it when it was first published.
This whole concept is simply levels of magnitude beyond what the average person can comprehend or even digest. It's so beyond our conditioning of how we've been told how the world works that it will be dismissed with a wave of the hand and a disgusted snort of contempt. Sad really.
In the Art Cashin post earlier I talked about Art having to change his entire world view in order to even begin to see the manipulation. Since he has no reason to do so and every reason not to, there is not even the slightest chance Cashin will see the 18 wheeler before he is run over. As well as 99% of the world's population.
I have read that before, but thinks for the re-read reminder.
Old Chinese proverb "may you live in interesting times"
applies to us now, as we live in the most interesting of times....
I thought that was a curse, not a proverb.
thanks velo, excellent summation of where we were, where we are, and where we are headed
Of course it won't happen. Our credit rating is based on risk of default. The US will NEVER default on our debts. It is abundantly clear that we will print money until the currency is worthless before we default on our debts.
Printing worthless money is default.
Printing money that will quickly be worth less is hyperinflation.
Which is why then comes a 'new' USA currency with all the claims of it being "better" in whatever way they can force, i mean CONvince, the sheeple to accept the new FIAT currency and not the old FIAT currency.
Both will be FIAT, thus the same intrinsic value.
In the end the Central Banksters will do ANYTHING (including killing a POTUS or three) to keep their game going.
the end is near.
S&P, Moody's, Fitch et al. will NEVER EVER EVER downgrade the US. EVER. It is against their self-interest to do so.
They get paid by companies to rate products. If any of these companies were to have the gall to actually rate something honestly, such as the subprime toxic waste a couple of years ago, they could get zero business.
It's simple game theory to show that none of these companies will ever issue something poorly against the companies they are hired by.
It's hilarious that investors still react to what they say, as if they had any credibility. The Emperor has no clothes on, everyone knows he has no clothes on, yet they have no idea what to do now that they know the Emperor has no clothes on, so they keep behaving like they believe he does.
And the sickening part about all of this is that NO ONE WILL DO ANYTHING ABOUT THIS FRAUD.
Completely agreed.
Welcome to the "new normal."
Don't forget that any AAA sovereign downgrades could play a huge role in the currency market. Again, this reflects back to politics.
so Thats what george, hanky and bernanke meant when the said the ECONOMIC FUNDAMENTALS ARE SOUND ! HA HA lol.
GEITHNER: V.STRONG CASE FOR ASSISTING STATES ON SIGNIF SCALE]
So, is anyone surprised at this?
QE will go on forever.
yep.
Till it doesn't.
The global bond market will determine the credit rating of the United States. I believe the United States could be forced to pay higher yields to service its debt if we continue down the current path.
At this point I've heard the "if we continue down the current path" shtick for years. We have been walking down this path for years. We have chosen this path.
We have chosen this path.
THAT is a great observation. If the end is near, as Deadhead and Hulk say, then got:
Gold?
Lead and lead delivery systems?
In shape?
Isn't monetizing a de-facto default? It sure is for the debt holder.
Let's use language everyone on tee vee can understand: the US is never going to repay the debt it has issued. We're not going to pay it back.
"...Geithner told the panel, also has to care a lot about getting the economy back on track and repairing the damage caused by the recession. "
Who repairs the damage caused by the Fed and the politicians?
Turbo = Robbing Sam to pay Jamie.
what he said: This is why the recently created fiscal commission is so important, Geithner said.
Anyone who cares about the U.S.'s long-term fiscal condition, Geithner told the panel, also has to care a lot about getting the
economy back on track and repairing the damage caused by the recession.
What he meant to say (my words in paranthesis):
This is why the recently created fiscal (delusion) commission is so important, Geithner said.
Anyone who cares about the U.S.'s long-term fiscal (ponzi scheme) condition, Geithner told the panel, also has to care a lot about getting the (manipulation)
economy back on track and repairing the damage caused by the (gambling big banks) recession.
Tiny Tim must be talking about all the lefty states that have dug themselves into a nice hole by scarying away businesses, encouraging radical union groups, high taxes, high unemployment, unfunded liabilities and idiot leadership. The message, business as usual we are here to bail you out, now please vote for us in November. So transparent.
Keep on fighting our way to fiscal responsibility. Nobody brings up the untouchable elephants sitting in the room.
Keep on spending Trillions of dollars on bailouts (bank, state govt) and wars, and introduce miniscule "austerity" measures like healthcare reform (which I doubt will increase costs, but will decrease services). In any event, healthcare costs for most employees went up 25% last year and we got "great" new offerings this year - including a $2400 per person high deductible plan, which my company shows me costs around $10,000 to purchase from BlueCross Blue Shield (inclusive of $9000 they cover, and $1000 I pay). That is unbelievable, on the verge of catastrophic health insurance - we are being asked to shoulder the bill for an amazingly inefficient set of fiefdoms which have done everything to increase costs...however, healthcare is nothing next to the perpetual wars and bailouts.
Geithner and all are lying through their teeth because they have no choice. They will micromanage the things that can be affected (austerity on real public services) and say nothing about the rest. How is it that GE has received $300 Billion+ in backing (e.g. through FDIC) and loans and trash-for-cash Fed programs...and we don't hear mum about this? (the total states deficit is less than that...granted the govts and spending needs to be cut...I am not arguing that govt at all levels has outgrown productive capacity of the people).
one more point...bailing out the states is 100% indicative of the way in which they plan to reflate. we won't be getting tax cuts, but we'll funnel money into the varacious giant govt cabal at all levels...
the cash will be doled on
banks, military, federal lending agencies (fannie/freddie etc), corporations, state govts, and then federal healthcare (medicare/medicaid)
absent the list above: tax cuts for the productive masses
Hey Lil' Tim, how the fk can u have aaa when over 40 states are bankrupt and need Benny the printer in chief? You are a serious fk head and deserve top ba laughed at
I think your abbreviation should be pk-nut and not the obsolete fk-head.
"They" have no choice but to drop the market again. Their 3/09 drop allowed them to accumulate power to a point. Yet, they were so eager to buy up the market they left the average investors behind. Now, their pyramid scheme has no feeder funds. SO, in the spirit of fairness, they will drop it again to make money on the short side, as they conglomerate power even more. It worked so well the first time, they will succumb to their own greed. That will be the opportunity of a lifetime for the smart (or lucky) trader. When the money is made, you must cash out fast. Then, pay off all debt, buy a farm, and rekindle your link to mother earth. She will be the only mother from which you will need to feed.........only then will you find rest and comfort.
It starts soon IMO. Maybe at 2 pm today.
for consideration, i would add a possibility of a start date when health care reform passes.
Regardless of what people may think about health care reform (I tend to view it as a choice between being bent over by the medical industrial complex or being bent over by the government), I think your idea fits nicely into what is really going on (at least according to my hallucinogenic crystal ball):
(1) The bill and the methods being used to pass it are somewhat unpopular (funny, don't seem to hear the term 'nuclear option' much these days in the media - used to be a very popular term a few years ago).
(2) There is no chance the bureau-rats don't know exactly how many votes they have, but you are hearing conflicting counts from the leadership - hello misdirection. Keep the citizens confused. And hopeful. And delay the vote...
(3) ...until the weekend. They are waiting until the close of the news cycle to pass it. It will pass.
(4) Come Monday, there will be a 'big' news event to wipe health care reform discussion off of the headlines. A stock market crash, as you suggest, would fit this bill nicely. Maybe they are counting on it happening. Maybe they will help it along if it does. Maybe they will start it if it doesn't. Or maybe they will start something bigger...
(5) You won't hear any significant mention of health care reform in the MSM between Monday, March 22nd and November elections. Sure some blogs and radio talk shows will have fits, but they have limited exposure to the masses.
(6) Come November, we will have some nice new war or some such, complete with aerial images of bunker penetrations to shock and awe the general public. Health care will be forgotten (doesn't start for another four years, anyway, and it's not like you are going to hear about it during that period from the MSM), as will all this talk of punishing those who did bad financial things to the country's private regions. An amazing number of incumbents will be re-elected.
So speaketh teh crystal ball. Which also doubles as a hookah, I might add. Comes in quite handy in times like these.
Shanky would call this a top were it not for the PPT. So he states on his blog site. Are we all waiting for the selling to start? It feels that way.
this is almost funny:
U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today.
The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.
Just a couple of weeks ago geithner and romer were talking that employment would start increasing and they clearly tried to signal that things would improve on the unemployment front. they have completely shifted the tone just over the course of approx. one month.
looks like cover for mid terms as well as justification for new keynesian spending directed at the States. folks, these people are in a panic (and rightly so). it is going to get far uglier......
This is what Marc Faber is talking about. The worse things get the more aggressively the Feds pump money. Stocks to the moon, gold to Pluto, currency to hellfire.
You can burn the furniture to stay warm, but only once.
they have finished the furniture and on the doors, walls and roof now!
HEALTHCARE:
Most people do not know it but companies like BlueCross make most of their money by investing "premiums" into the market. They do not make money in healthcare. This is simply a scheme to move money from Medicare and private persons back into the market. It has nothing to do with healtcare. That is merely a Trojan horse. This is a wealth grab. Now, each person that earns anything will have to write a check for health insurance (along with home, car, and whatever insurance) every month to the WallStreet mob. This is a shakedown disguised as a health insurance issue.
Wake-up America!!!!!!!!!!!!!!
"Its a joke....its all a joke...."
I saw this on ran squawk:
"Deadhead upgrades Timothy Geithner from "phucknut" to "conviction list phucknut"
Invest accordingly.
Deadhead,
You working now? I thought you day time job was as head ZH poster? :>)
Smile, though your heart is aching...
Thanks, DH.
IMHO, Moodys already f8cked up. Remember when blue chips and AAA's got downgraded. Everyone else dropped a notch and all hell broke loose. Im with Julian Robertosn. "Norway, hands down"
How ironic it will be when main street has to burn their new "flip this house" edition hardwood floors to heat their homes.
OCTOPVS
I remain in a shocked as our Government blatantly continues to guarantee the failures of so many against default and loss and henceforth they continue to blindly push the innocent citizen further and further in the hole. What a shame!
Till it won't.
AAA = ASS X3
Gold has already priced it in at $1120 per troy oz..the Markets always win.
Moody's et al: "Oww! Timmy, your elbows are sharp!"
GEITHNER: V.STRONG CASE FOR ASSISTING STATES ON SIGNIF SCALE]
That's some world-class level "Recovery" we got going on here, eh?
World. Freaking. Class.
Maybe Geithner should head over to China and explain to then that CALPERS bailout make Shenzen rich, rich, rich. Twickle down
They've been planing this ever since California has been issuing IOU's
USA will not go down.
No states will go down - anybody and everybody will be bailed or backstopped.
However, you the individual may easily go down. (Unless you have a govt pension,
in which case I will bail you out.)
Whether you like it or not, get used to the real 'new normal'.
"Don't mess with a rat in a corner". (especially the biggest rat in the world)
h/t JM
In the end we will have hyper-DE-flation in all things measured against gold, and hyper-IN-flation in all things measured against dollars.
http://fofoa.blogspot.com/2009/10/gold-is-money.html
He added that if Congress were to act on the budget proposals of the Obama administration -- such as healthcare reform -- it would result in a "dramatic" improvement in the U.S. fiscal position. ~ (Geithner)
The Geithner-Obama budget assumptions remind one of the famous Dilbert cartoon where Dilbert predicts company profitability with two key revenue assumptions: 1) that an armored car crashes through a company wall and spills its contents, and 2) a comet is assumed to strike oil on company property. That’s the way D.C. is making its budget.
The truth is, D.C. has a nation in deep recession because of its policies to transfer the wealth and to increase the debt.
Michael Pollaro at True/Slant warns that “at $12 trillion, the U.S. government’s debt is at a 50 year high.
“If interest rates simply return to the long term average rate,” says Pollaro, “we are looking at an interest cost of $738 billion on 2009 government debt levels, 92% higher than in 2009… 35% of the government’s receipts would be going to pay the interest on the government’s debt.”
If interest rates were to overshoot that long term average rate because of, say, 1970s' inflation, “we are looking at an interest cost of a huge $1.2 trillion,” nearly “60% of the government’s receipts would be going to pay the interest on the government’s debt.”
At such payout levels on the debt, the U.S. will lose its AAA status no matter how Orszag manipulates the books or Moody’s the alphabet. Obviously, D.C. and the bankers are trying to take it all and make the taxpayers liable for it. But that’s not the way it’s going to come down. People are up against it; that’s why taxes are down. That’s why California, and several other states, are in the hole. They budgeted on hopes and they didn’t happen. And now Geithner says it’s going to happen, anyway.
How? Jobless recovery? That’s how he’s going to make those taxes in the Treasury coffers pile up? Who’s going to pay those taxes? Why, the guys who don’t have jobs!
What this economy needs to do is put people in the private sector back to work. But Geithner has no plans for that. IOW, Geithner is going to say: Hey California, jack those taxes up. We’ve got a jobless recovery going here. Last month, 30 states, including California, had an increase in unemployment.
We’re on the road to recovery, right, with the granddaddy of all government wealth transfer programs--"healthcare reform”--coming our way. To make that work, D.C. is going to tax us for three or four years before any benefits are “distributed,” i.e., before Obama has to run for his second term. Here again, you have the taxpayers in recession and the government taking money away from the private sector when it doesn’t have it; while small businesses are going bankrupt, while one of five US males is unemployed, while families are losing their homes, and the elderly fear the devaluing currency is leaving them in extreme indigence for their remaining years. You want to hurt something? Penalize it, tax it, shrink it.
The U.S. is not on the road to recovery, it’s on the road to serfdom.
Spot-on, JR. Bravo.
I've been reading Hayek on the bus and the contemporary parallels are eerie.
The road to serfdom = the road to totalitarianism
Well, there you have it. No defaults, pure printing.
I opined nearly two years ago that "the next great bull market" would be in linen rag paper and green and black ink.
Couldn't have been more true.
The White House can't stop QE and save their administration. It's one or the other. If they stop QE the market drops back to last March and the administration goes down with it.
The alternative is to keep streching the rubber band and hope they can get out of office before it snaps.
Wall Street would rather have the GOP running Congress, so watch for an engineered crash before the Fall elections. All the pieces are in place to manage an epic decline. Ben and Tim are puppets frontrunning the "current" momentum.
This event + trillions spent with no improvement in employment will create an election cocktail of galactic proportions.
This, of course, is MHO.
One of the themes in Sylvia Browne’s excellent summary book, Secret Societies, is that the power elites’ original idea was to “have the major parties alternate control of the government so that the public would think they had a choice come Election Day. This eventually evolved into having the power elite move both parties toward the political center. This resulted in the Democratic and Republican parties becoming almost identical in nature so that even if the American people did ‘throw the rascals out’ in any election, it wouldn’t lead to any major shifts in policy.”
I believe that this theme has been reality since 1992. So, we're settling into stasis, without the stability!
Averell Harriman is known as the neo-founder of the Dems. His wife was a primary fund raiser for the party. Prescott Sheldon Bush, his BFF, was a top "aid" for Ike, a Senator (how he was elected after his treason concerning the "Trading with the Enemies Act" is beyond me! Guess 'merica has been asleep at the wheel this whole century) and his son and grandson...well you know. All these men were members of Scull and Bones. Yes they run both sides. Their thinking: It takes both, to wash hands of "filth" (yes they deem most people as such).
I'm glad that Geithner is finally getting to the root of the problem. Namely, Grandma's $600 bucks a month in Social Security. Here I thought it was a den of theives on Wall St. ? Foolish me.
I would truly like to see how they are going to bailout the states without causing the inflation that they have been trying to keep tapped down. Once you bailout the states once, they won't care about keeping their fiscal houses in order because they will know that the Federal govt. won't allow us to fail. And once you bailout one state, the rest with their politicians in washington will do everything they can to inflate the debt and milk it for as much as they can.
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