S&P Threatens to Downgrade U.S. Credit Rating (er, Japan, excuse me)

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Wed, 01/27/2010 - 20:27 | 208481 Carl Marks
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Do you think the parasites (voters) are ready to give up their subsidies?

Wed, 01/27/2010 - 19:51 | 208446 Thoreau
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Most of us will either be dead or in our bunkers by the time S&P downgrade Uncle Sham.

Wed, 01/27/2010 - 18:38 | 208385 Noah Vail
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GDP is $13 trillion, that's a hoot. GDP includes government spending of borrowed and taxed money, plus service sector revenue that produces nothing. The real productive GDP is more like $8-10 Trillion. Try recalculating the debt ratio on that number.

Wed, 01/27/2010 - 18:05 | 208338 Mr Lennon Hendrix
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The inflation from monitary expansion won't do the job alone anymore.  Time to Devalue!  Unpeg China, and most likely the Doelarr loses 15% overnight (although Reg said the inverse might happen and the Yuan could weaken...this is worth considering)  However, in a year or so, inflation will do it's master's final bidding and take out the rest of the world's wealth (gold snitches!).  they better devaulue while they have the chance! 

Wed, 01/27/2010 - 16:59 | 208237 ATG
ATG's picture

S&P downgrade on USA before they default?

Right on the heels of United States District Court

Judge Lewis Kaplan dismissing $96 Billion of MBS

rating claims from the bench in his courtroom in

the Southern District of New York?

Not likely...



Wed, 01/27/2010 - 16:25 | 208180 Anonymous
Anonymous's picture

"Since we are pursuing the same Keynesian stimulus policies as is Japan, we will run into the same problem: a stagnating economy."

Hm, wonder what's this all 'bout huh...

Wed, 01/27/2010 - 16:22 | 208173 Anonymous
Anonymous's picture

politicians? who voted for these clowns the last 30 years? (I date eveything back to the Malaise Speech)

Wed, 01/27/2010 - 12:06 | 207704 Anonymous
Anonymous's picture

dont get it please explain

Wed, 01/27/2010 - 11:28 | 207604 Artful_Dodger
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I thought that most Japanese Gov. debt was held domestically...how would this effect the yen other than the Japanese ability to buy more treasuries?



Wed, 01/27/2010 - 11:12 | 207581 Anonymous
Anonymous's picture

1) an expansion of tax credits to match retirement savings -
Is that a means to get more money into 401k plans and force it to buy treasuries ??
2) The one thing that Japan has is savings.- WRONG !! Personal savings rate in Japan has now dropped from a 1990 high of 20% + to about 2 %. The retirees are in DEEP DEEP trouble.

Wed, 01/27/2010 - 18:25 | 208362 Econophile
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Yes, but they finance almost all of their debt internally. Lots of savings through the postal savings system.

Wed, 01/27/2010 - 10:49 | 207558 A Man without Q...
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It is forbidden for the ratings agencies to downgrade the US, on grounds of national security.

Wed, 01/27/2010 - 10:29 | 207528 Anonymous
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I had a bizarre dream last night. I was watching a chart of the USDEUR... And suddenly after the turn of midnight on a new year's change, the EURUSD started ticking up from 1.40...1.50...1.60..1.80..2.40...2.90 just like that. The news came out the next day the US govt just issued $3T in new money in one day.

Bizarre dream eh? I was excited to see the status of my gold position, but kitco's website was down as it was the weekend. I imagined gold would gap up to 2000/oz.

Wed, 01/27/2010 - 11:37 | 207623 Master Bates
Master Bates's picture

Yeah, you were certainly dreaming.

Gold isn't going to 2000/oz.  Also, if there were that many dollars printed, there would likely be more Euros printed as well.

It'd take more money being printed than 3T to get currency to debase that much, which is the fundamental reason you're not going to see gold at 2000.

Wed, 01/27/2010 - 21:57 | 208549 Anonymous
Anonymous's picture

So both currencies would then devalue against commodities and precious metals such as gold. Commodities are in a limited amount relative to fiat currency which is potentially unlimited. No not necessarily, it depends also in part on how it effects the treasury market. If yields then soar out of default or inflation risk, money could be placed in gold. By the way even then gold market operates with a different dynamic. There are massive short positions in gold, it is unclear as to whether that is even coverable. If gold say even jumps higher to even 1600 in a short amount of time. JPM and the big consolidated shorts in gold are going to have a very very rough time. By the way the same credit bubble that is sustaining asset prices is also sustaining the US dollar bubble. If US creditors go bankrupt, they would be forced to liquidate their fx reserve.

Wed, 01/27/2010 - 10:09 | 207504 Daedal
Daedal's picture

I'm not holding my breath.

Any downgrade on American debt will be too little too late. The downgrades should've been made the day the debt ceiling got extended, and they should've been brutal. (If you want to get really technical, the downgrades should've been made long ago).

Instead, rating agencies are complacent as they have ever been, only offering lip service to make themselves appear relevant.

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