STUNNER: S&P REVISES US OUTLOOK TO NEGATIVE

Tyler Durden's picture

You read that right: S&P just revised its US outlook to negative. EURUSD surges on what can be seen as revolutionary news...

From S&P:

Overview

We have affirmed our 'AAA/A-1+' sovereign credit rating on the United States of America.

  • The economy of the U.S. is flexible and highly diversified, the country's effective monetary policies have supported output growth while containing inflationary pressures, and a consistent global preference for the U.S. dollar over all other currencies gives the country unique external liquidity.
  • Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable.
  • We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns.

Rating Action

On April 18, 2011, Standard & Poor's Ratings Services affirmed its 'AAA'  long-term and 'A-1+' short-term sovereign credit ratings on the United States of America and revised its outlook on the long-term rating to negative from stable.

Rationale

Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy, backed by a strong track record of prudent and credible monetary policy. The ratings also reflect our view of the unique advantages stemming from the dollar's preeminent place among world currencies. Although we believe these strengths currently outweigh what we consider to be the
U.S.'s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the 'AAA' level.

The U.S. is among the most flexible high-income nations, with both adaptable labor markets and a long track record of openness to capital flows. In addition, its public sector uses a smaller share of national income than those of most 'AAA' rated countries--including its closest peers, the U.K., France, Germany, and Canada (all AAA/Stable/A-1+)--which implies greater
revenue flexibility.

Furthermore, the U.S. dollar is the world's most used currency, which provides the U.S. with unique external flexibility; the vast majority of U.S. trade flows and external liabilities are denominated in its own dollars. Recent depreciation of the currency has not materially affected this position, and we do not expect this to change in the medium term (see "Après Le Déluge, The U.S. Dollar Remains The Key International Currency," March 10, 2010, RatingsDirect).

Despite these exceptional strengths, we note the U.S.'s fiscal profile has deteriorated steadily during the past decade and, in our view, has worsened further as a result of the recent financial crisis and ensuing recession. Moreover, more than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on a strategy to reverse recent fiscal deterioration or address longer-term fiscal pressures.

In 2003-2008, the U.S.'s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most 'AAA' rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.

On April 13, President Barack Obama laid out his Administration's medium-term fiscal consolidation plan, aimed at reducing the cumulative unified federal deficit by US$4 trillion in 12 years or less. A key component of the Administration's strategy is to work with Congressional leaders over the next two months to develop a commonly agreed upon program to reach this target. The President's proposals envision reducing the deficit via both spending cuts and revenue increases, and the adoption of a "debt failsafe" legislative mechanism that would trigger an across-the-board spending reduction if, by 2014, budget projections show that federal debt to GDP has not yet stabilized and is not expected to decline in the second half of the current decade.

The Obama Administration's proposed spending cuts include reducing non-security discretionary spending to levels similar to those proposed by the Fiscal Commission in December 2010, holding growth in base security (excluding war expenditure) spending below inflation, and further cost-control measures related to health care programs. Revenue would be increased via both tax reform and allowing the 2001 and 2003 income and estate tax cuts to expire in 2012 as currently scheduled--though only for high-income households. We note that the President advocated the latter proposal last year before agreeing with Republicans to extend the cuts beyond their previously scheduled 2011 expiration. The compromise agreed upon in December likely provides short-term support for the economic recovery, but we believe it also weakens the U.S.'s fiscal outlook and, in our view, reduces the likelihood that Congress will allow these tax cuts to expire in the near future. We also note that previously enacted legislative mechanisms meant to enforce budgetary discipline on future Congresses have not always succeeded.

Key members in the U.S. House of Representatives have also advocated fiscal tightening of a similar magnitude, US$4.4 trillion, during the coming 10 years, but via different methods. House Budget Committee Chairman Paul Ryan's plan seeks to balance the federal budget by 2040, in part by cutting non-defense spending. The plan also includes significantly reducing the scope
of Medicare and Medicaid, while bringing top individual and corporate tax rates lower than those under the 2001 and 2003 tax cuts.

We view President Obama's and Congressman Ryan's proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Standard & Poor's takes no position on the mix of spending and revenue measures the Congress and the Administration might conclude are appropriate. But for any plan to be credible, we believe that it would need to secure support from a cross-section of leaders in both political parties.

If U.S. policymakers do agree on a fiscal consolidation strategy, we believe the experience of other countries highlights that implementation could take time. It could also generate significant political controversy, not just within Congress or between Congress and the Administration, but throughout the country. We therefore think that, assuming an agreement between Congress and the President, there is a reasonable chance that it would still take a number of years before the government reaches a fiscal position that stabilizes its debt burden. In addition, even if such measures are eventually put in place, the initiating policymakers or subsequently elected ones could decide to at least partially reverse fiscal consolidation.

In our baseline macroeconomic scenario of near 3% annual real growth, we expect the general government deficit to decline gradually but remain slightly higher than 6% of GDP in 2013. As a result, net general government debt would reach 84% of GDP by 2013. In our macroeconomic forecast's optimistic scenario (assuming near 4% annual real growth), the fiscal deficit would fall to 4.6% of GDP by 2013, but the U.S.'s net general government debt would still rise to almost 80% of GDP by 2013. In our pessimistic scenario (a mild, one-year double-dip recession in 2012), the deficit would be 9.1%, while net debt would surpass 90% by 2013. Even in our optimistic scenario, we believe the U.S.'s fiscal profile would be less robust than those of other 'AAA' rated sovereigns by 2013. (For all of the assumptions underpinning our three forecast scenarios, see "U.S. Risks To The Forecast: Oil We Have to Fear Is…," March 15, 2011, RatingsDirect.

Additional fiscal risks we see for the U.S. include the potential for further extraordinary official assistance to large players in the U.S. financial or other sectors, along with outlays related to various federal credit programs. We estimate that it could cost the U.S. government as much as 3.5% of GDP to appropriately capitalize and relaunch Fannie Mae and Freddie Mac, two financial institutions now under federal control, in addition to the 1% of GDP already invested (see "U.S. Government Cost To Resolve And Relaunch Fannie Mae And Freddie Mac Could Approach $700 Billion," Nov. 4, 2010, RatingsDirect). The potential for losses on federal direct and guaranteed loans (such as student loans) is another material fiscal risk, in our view. Most importantly, we believe the risks from the U.S. financial sector are higher than we considered them to be before 2008, as our downward revisions of our Banking Industry Country Risk Assessment (BICRA) on the U.S. to Group 3 from Group 2 in December 2009 and to Group 2 from Group 1 in December 2008 reflect (see "Banking Industry Country Risk Assessments," March 8, 2011, and "Banking Industry Country Risk Assessment: United States of America," Feb. 1, 2010, both on RatingsDirect). In line with these views, we now estimate the maximum aggregate, up-front fiscal cost to the U.S. government of resolving potential financial sector asset impairment in a stress scenario at 34% of GDP compared with our estimate of 26% in 2007.

Beyond the short- and medium-term fiscal challenges, we view the U.S.'s unfunded entitlement programs (such as Social Security, Medicare, and Medicaid) to be the main source of long-term fiscal pressure. These entitlements already account for almost half of federal spending (an estimated 42% in fiscal-year 2011), and we project that percentage to continue increasing as long as these entitlement programs remain as they currently exist (see "Global Aging 2010: In The U.S., Going Gray Will Cost A Lot More Green," Oct. 25, 2010, RatingsDirect). In addition, the U.S.'s net external debt level (as we narrowly define it), approaching 300% of current account receipts in 2011, demonstrates a high reliance on foreign financing. The U.S.'s external indebtedness by this measure is one of the highest of all the sovereigns we rate.

While thus far U.S. policymakers have been unable to agree on a fiscal consolidation strategy, the U.S.'s closest 'AAA' rated peers have already begun implementing theirs. The U.K., for example, suffered a recession almost twice as severe as that in the U.S. (U.K. GDP declined 4.9% in real terms in 2009, while the U.S.'s dropped 2.6%). In addition, the U.K.'s net general government indebtedness has risen in tandem with that of the U.S. since 2007. In June 2010, the U.K. began to implement a fiscal consolidation plan that we believe credibly sets the country's general government deficit on a medium-term downward path, retreating below 5% of GDP by 2013.

We also expect that by 2013, France's austerity program, which it is already implementing, will reduce that country's deficit, which never rose to the levels of the U.S. or U.K. during the recent recession, to slightly below the U.K. deficit. Germany, which suffered a recession of similar magnitude to that in the U.K. (but has enjoyed a much stronger recovery), enacted a constitutional limit on fiscal deficits in 2009 and we believe its general government deficit was already at 3% of GDP last year and will likely decrease further. Meanwhile, Canada, the only sovereign of the peer group to suffer no major financial institution failures requiring direct government assistance during the crisis, enjoys by far the lowest net general government debt of the five peers (we estimate it at 34% of GDP this year), largely because of an unbroken string of balanced-or-better general government budgetary outturns from 1997 through 2008. Canada's general government deficit never exceeded 4% of GDP during the recent recession, and we believe it will likely return to less than 0.5% of GDP by 2013.

Outlook

The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years. The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.

Some compromise that achieves agreement on a comprehensive budgetary consolidation program--containing deficit reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013--is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

Standard & Poor's will hold a global teleconference call and Web cast today--April 18, 2011--at 11:30 a.m. New York time (4:30 p.m. London time). For dial-in and streaming audio details, please go to www.standardandpoors.com/cmlive.

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aVian's picture

and the dollar is up...like WTF? 75.390

bankrupt JPM buy silver's picture

they bought it up triggered some stops, trading 101.

 

www.silvergoldsilver.blogspot.com

Fish Gone Bad's picture

That deer in the headlights photo is killer funny.

Ray1968's picture

That deer is me!!! All my S&P puts EXPIRED ON FRIDAY!!!!!!

muthafuckers

Mr Lennon Hendrix's picture

The President's Working Group on Financial Markets is being forced to liquidate their respected portfolios, as to stabilize the markets.  Sell that SLW Bernanke, sell those miners Geithner, sell that equity Shapiro!

http://www.archives.gov/federal-register/codification/executive-order/12...

redpill's picture

Look at the market maggots scramble today, suddenly worried that the festering corpse of the US economy that they've been feeding on might actually have something wrong with it.

Justifying QE3 is going to be way easier for Bernank than I thought.  Couple little theater events like these and you'll have bankers swearing the world will end without it.

TruthInSunshine's picture

If one former fiatski (USD, Euro, Yen, whatever) now equals .75 or .50 or .25, one former stock certificate for 95% of equities = .10 to .000001.

Companies have been diluting the stock pool (and corporate bond/debenture pool) like never before.

LULZ.

reinhardt's picture

about the size of it

u of t is benefiting a little

hey redpill, drop me an email

r

disabledvet's picture

Russian KGB say "never have coup on Monday" and this is no exception.  "Sorry about your trading losses but our traders are more important than yours."  Entry point for buyers (or short sellers apparently), nothing more as "downgrade had exact opposite effect of words."

TruthInSunshine's picture
Fisher just basically stated Bernanke perjured himself (which we all knew, anyways). LULZ. Epic.
Mae Kadoodie's picture

though it looks as if that deer is standing in the woods not in the middle of the road.  which begs the question, does a deer shit in the woods?

jus_lite_reading's picture

Classic!!!!

Women and children first... man the lifeboats. The RMS European Titanic is going down and the US Olympic with it! Time to bail out!

StychoKiller's picture

That picture would have lots moe "impact" if the deer were actually in the middle of a road!

TruthInSunshine's picture

30 Best (i.e. most idiotic) Quotes of The Bernank (the guy who is going to save the economy - good luck and God bless):

http://www.theburningplatform.com/?p=14138

  • THE BEST OF BEN:

    The following are 30 Ben Bernanke quotes that are so stupid that you won’t know whether to laugh or cry….

    #1 (October 20, 2005) “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”

    #2 (On 60 Minutes in response to a question about what would have happened if the Federal Reserve had not “bailed out” the U.S. economy) “Unemployment would be much, much higher. It might be something like it was in the Depression. Twenty-five percent.”

    #3 (February 15, 2006) “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

    #4 (January 10, 2008) “The Federal Reserve is not currently forecasting a recession.”

    #5 (When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) “The Federal Reserve will not monetize the debt.”

    #6 “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”

    #7 “The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities.”

    #8 (November 21, 2002) “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”

    #9 (March 28, 2007) “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

    #10 (July, 2005) “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

    #11 “Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.”

    #12 (February 15, 2007) “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”

    #13 (October 31, 2007) “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

    #14 (On the possibility that the Fed might launch QE3) “Oh, it’s certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.”

    #15 (November 15, 2005) “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

    #16 (January 18, 2008) “[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself.”

    #17 “I wish I’d been omniscient and seen the crisis coming.”

    #18 (May 17, 2007) “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”

    #19 “The GSEs are adequately capitalized. They are in no danger of failing.”

    #20 (Two months before Fannie Mae and Freddie Mac collapsed and were nationalized) “They will make it through the storm.”

    #21 (September 23rd, 2008) “My interest is solely for the strength and recovery of the U.S. economy.”

    #22 “Economics has many substantive areas of knowledge where there is agreement but also contains areas of controversy. That’s inescapable.”

    #23 “I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.”

    #24 “We’ve been very, very clear that we will not allow inflation to rise above 2 percent.”

    #25 “…inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve’s dual mandate in the longer run.”

    #26 (June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

    #27 “Not all information is beneficial.”

    #28 “The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.”

    #29 “Similarly, the mandate-consistent inflation rate–the inflation rate that best promotes our dual objectives in the long run–is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate.”

    #30 (October 4, 2006) “If current trends continue, the typical U.S. worker will be considerably more productive several decades from now. Thus, one might argue that letting future generations bear the burden of population aging is appropriate, as they will likely be richer than we are even taking that burden into account.”

redpill's picture

They were all laughably ironic until #30, which just makes me want to punch him in the face.

undercover brother's picture

Excellent post.  Why anyone would trust anything the bernanke says is beyond me.  Either those in power either lack the mental capacity to confront him or they simply realize Ben's their fall guy for when the house of cards comes tumbling down.

The Real Fake Economy's picture

excellent top 30!! Ben is def the fall guy.  when TSHTF this guy's toast. 

Roger O. Thornhill's picture

I made a pared down list that is utterly egregious and also added the dates for some quotes that didn't have any. I also added #7 - this was a Q&A on 60 minutes from 2009 that was mocked by Jon Stewart - it really needs to be there to see that the Bernank just lies all the time.


21 Best (i.e. most idiotic) Quotes of The Bernank! (I trust everything he says - he has such a great track record!)

THE BEST OF BEN:

The following are 21 Ben Bernanke quotes that are so stupid that you won’t know whether to laugh or cry….


#1 (October 20, 2005) “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”

#2 (November 15, 2005) “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

#3 (February 15, 2006) “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

#4 (January 10, 2008) “The Federal Reserve is not currently forecasting a recession.”

#5 (When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt - June 3, 2009) “The Federal Reserve will not monetize the debt.”

#6 (December 4, 2010 - 60 minutes) “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”

#7 (March 15, 2009 - 60 minutes)

       Bernanke: To lend to a bank…it’s much more akin, although not exactly the same, as printing money than it is to borrowing.

       Q (60 minutes): You’ve been printing money?

       Bernanke: Well, effectively.

#8 (December 4, 2010 - 60 minutes) “The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities.”

#9 (November 21, 2002) “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”

#10 (March 28, 2007) “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

#11 (July, 2005) “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

#12 (February 15, 2007) “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”

#13 (October 31, 2007) “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

#14 (On the possibility that the Fed might launch QE3) “Oh, it’s certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.”

#15 (December 4, 2010) “I wish I’d been omniscient and seen the crisis coming.”

#16 (May 17, 2007) “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”

#17 “The GSE's (i.e. Fannie/Freddie) are adequately capitalized. They are in no danger of failing.”

#18 (Two months before Fannie Mae and Freddie Mac collapsed and were nationalized) “They will make it through the storm.”

#19 “I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.”

#20 (June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

#21 (October 4, 2006) “If current trends continue, the typical U.S. worker will be considerably more productive several decades from now. Thus, one might argue that letting future generations bear the burden of population aging is appropriate, as they will likely be richer than we are even taking that burden into account.”

hazenyc's picture

I'm pretty sure you had delayed quotes, when the news came out at 9:03am EST the DXY index sold off quite a bit

DarkMath's picture

The reason the Dollar is rising is the Finns are finished with the EU. Portugal bailout is in jeopardy and that is bad for the Euro, Dollar benefits on flight to quality.

tmosley's picture

Flight from frying pan into fire.

Popo's picture

Geithner is going to use this as ammo to convince uneducated Congressmen to raise the ceiling.  Even though it's the rising ceiling that prompted the downgrade.

 

trav7777's picture

the dollar is not quality.

At this point the Euro is.  They are actually going to impose austerity and make the PIIGS bitches pay back the core EU bankers the money they invented out of thin air plus interest.

The core nations are going to try to bust out the periphery...this trend will eventually fracture the EU

Boilermaker's picture

LOL...yea, the EUR is where it's at.

Sure.

fredquimby's picture

Glad you edited out that gratuitous abuse, it does not become you.

YOU may think the Euro is toast, but really, you have no idea, only your opinion.

http://fofoa.blogspot.com/2010/05/open-letter-to-emu-heads-of-state.html

 

 

redpill's picture

Why fuck with any of the big 3 at this point?  USD is obviously in a long painful death spiral, the Euro is going to be a rollercoaster as the fate of the EU hangs in the balance, and the Yen is going to be a mess as Japanese manufacturing is derailed and a quarter of their country and food supply is irradiated.

Large banks have no choice but to do a round robin with these currencies because they are the only ones that can withstand the daily flows that they need.  But for the rest of us, why get any where near them?  Fiat is still fiat, but you might as well pick one that hasn't completely gone to silly town.

A bank account in Singapore, in Singapore Dollars, is looking like a mighty fine hedge at this point.

bigkahuna's picture

Look out - the IRS seems to be catching onto the foreign bank deposits

 

I would like to hear from some people from Europe. This article is not saying anything that awakened people in the US do not already know. Do you in Europe buy any of the Dollar/Euro normalcy talk in this article? The article appears to be written to throw off people outside the US so that they might think it ok to invest in dollard or dollar denominated assets....?

redpill's picture

I was not suggesting the funds be hidden from the IRS.  Breaking tax law at this point is unnecessary and just puts a target on your back.  As these guys get increasingly desperate, the last thing you'll want is a target on your back.

My suggestion is to have such a bank account as a hedge and declare it to the IRS as you're supposed to.  It's not about hiding, it's about putting your money somewhere they can't easily get it in a currency they can't devalue.

centerline's picture

This next act in the theater of the absurd is to bake in some deflationary fear.  Gross is effectively long USD, correct?  S&P downgrade just puts a finger in the administration's eye to do something to get it's house in oder, which we all know is deflationary.  The blame being passed onto the politicians.  Of course, the taste of deflation is aimed at justifying the next round of QE.

Dr. Richard Head's picture

The one thing this, and many past, administrations don’t seem to grasp is that trying to fight off deflationary forces in discretionary is directly correlated to nondiscretionary inflationary force.  Fucking morons they are indeed.

Ray1968's picture

They can fix this problem with a couple of FBI raids on the S&P headquarters.

Nothing like a team of black-clad, MP-5 toting, jackboots kicking in your door to sway opinion on a credit rating.

Its what the mafia would do.

Ricky Bobby's picture

+1 S&P just impaired the US national secuiry, Homeland Security and Justice will have to investigate.

alpha60's picture

putin did it. and oh my, the fear, when your private jet door is broken in.

http://www.khodorkovsky-movie.com/

 

 

 

BrobamaReds's picture

S&P is not factoring in that Billionaires and Millionaires will pay more, don't they get it?  lol

Thomas's picture

Dollar is up because the US is "backed by a strong track record of prudent and credible monetary policy."

Blew a snot bubble when I read that clause.

mt paul's picture

securtize 

that snot bubble

slaughterer's picture

While the entire market is stunned by the S&P outlook negative, sinister things are happening in the corners it is not looking at.

Cindy_Dies_In_The_End's picture

Dear President O:

 

Frak you. We're voting for Trump.

Sorry about the whole negative outlook thingy.

 

Love,

 

S & P

Robot Traders Mom's picture

You should probably edit that. I think you accidentally said "we're voting for Trump."

Cindy_Dies_In_The_End's picture

Nope, wrote it on purpose for sarcastic effect, hoping folks would see the irony of electing a guy whose companies went bankrupt.

 

drink that coffee, people!

oogs66's picture

went bankrupt multiple times and is super rich, on tv all the time, bangs hot chicks, and probably could run for president!  maybe greece, ireland, and portugal could learn from him.  and he went into these things knowing he could go bankrupt and protected himself, yet we think out crap doesn't smell. 

 

 

Mr. Denny Kneel's picture

Your premise is incorrect. He went bankrupt in order to transfer the invested monies into his offshore accounts. Pretty easy, and legal way to rob your investors blind... Also, have you seen him bang those hot chicks? I wouldn't assume that the plumbing works.

Mr. Denny Kneel's picture

as  in "I am fired" or were you implying that the firing now is in my possession?

blunderdog's picture

When Trump says it, he's actually saying "your fired."

Not too smart, that fella.