Guest Post: Bailouts + Downgrades = Austerity And Pain

Tyler Durden's picture

Submitted by Nomi Prins

Bailouts + Downgrades = Austerity And Pain

The markets (read: traders with big books at mega financial firms and hedge funds) weren’t particularly shocked by last week’s wave of heavily pre-broadcast S&P sovereign debt downgrades. For months, the question wasn’t ‘if’, but ‘when.’ True to form, just as with the US downgrade, S&P’s reasons skated the surface of prevailing wisdom – governments have too much debt, and not enough income. That’s only a fraction of the story.

Nowadays, when any sovereign (including the US) gets downgraded by a rating agency, it's not just because its debt repayment ability is questionable (the publicized logic of rating agencies), but because it incurred more expensive debt to float its banking system. It chose to subsidize banks over people.

The S&P likes moving on Friday nights. It was on a Friday night that it downgraded US debt to AA+ from AAA. On Friday night, January 13, 2012,  it downgraded France and Austria from AAA to AA+, and 7 other European countries, too; Cyprus, Italy, Portugal, and Spain by two notches; Malta, Slovakia, and Slovenia, by one notch. Portugal, Cyprus, Ireland and Greece are at junk status. Germany’s AAA rating is intact.

Nowhere in S&P’s statement about “global economic and financial crisis”, did it clarify that sovereigns were hit due to backing their largest national banks (and international, US ones) which engaged in half a decade of leveraged speculation. But here’s how it worked:

1) Big banks funneled speculative capital, and their own, into local areas, using real estate and other collateral as fodder for securitized deals with derivative touches. 2) They lost money on these bets, and on the borrowing incurred to leverage them. 3) The losses ate their capital. 4) The capital markets soured against them in mutual bank distrust so they couldn’t raise more money to cover their bets as before. 5) So, their borrowing costs rose which made it more difficult for them to back their bets or purchase their own government’s debt. 6) This decreased demand for government debt, which drove up the cost of that debt, which transformed into additional country expenses. 7) Countries had to turn to bailouts to keep banks happy and plush with enough capital. 8) In return for bailouts and cheap lending, governments sacrificed citizens. 9) As citizens lost jobs and countries lost assets to subsidize the international speculation wave, their economies weakened further. 10) S&P (and every political leader) downplayed this chain of events.

The United States

On Aug. 5, 2011, S&P downgraded US government debt to 'AA+'. This was four days after Congress voted to raise the US debt cap - to prevent a downgrade - proceeded by political squabbling and the US Treasury and Fed begging Congress to raise the debt cap. S&P, beacon of stamp-any-toxic-asset-AAA, accountability, claimed, “American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.” In other words, too much debt, too little income.

According to the US Treasury, the main reason for the debt increase was a stalling economy –  lack of enough incoming tax receipts to pay US expenses, (which include interest payments on growing debt.) That’s not true. Tax receipts dropped $400 billion to $2.1 trillion in 2009 vs. 2008. Expenditures jumped to $3.5 trillion in 2009 from $3 trillion in 2008. Treasury debt ballooned by nearly $4 trillion from 2008 through 2010.

Where’s the money? About $1.6 trillion lies on the Fed’s books as excess reserves which banks  - dealers for sovereign debt - put there. Nearly a trillion dollars went to backing Fannie Mae, Freddie Mac - which enabled banks to artificially overvalue related securities, and extra interest payments. There was $700 billion in TARP, which though mostly repaid, never manifested into debt reduction, and hundreds of billions of dollars of asset guarantees underlying big bank mergers. So, 75% of the extra debt went to saving banks. S&P didn’t mention this. The policy repeated across the Atlantic.


The Irish government’s pain started when it guaranteed the bonds of Anglo-Irish bank in September 2008. By May, 2010, Central Bank head, Patrick Honohan, assured the world that he’d have ‘two big banks, fixed by the end of the year.’ Upon that endorsement, the government backed bondholders on the banks’ behalf. The economy deteriorated.

Six months later, nobody would lend to Irish banks. Irish austerity promises didn’t change the fact that Irish banks weren’t big enough to contain their waste. By November, 2010, banks paid for $60 billion Euro of maturing bonds with emergency ECB loans, and the ECB became the backbone for the Irish bank guarantee scheme, whose participants included Ireland’s big financial firms: Irish Life & Permanent p.l.c., Bank of Ireland, Allied Irish Bank p.l.c., Anglo Irish Bank Corporation Limited, and Irish Nationwide Building Society. Irish Government Debt doubled from 65.3 billion Euro to 118 billion Euro since 2009.

The ECB deemed the bailout a success. Yet, by the summer of 2011, Ireland was downgraded to a notch above junk and households (and foreigners) accelerated extracting money from Irish banks, weakening the banks’ funding base further. The Irish government now owes 110 billion Euros to the banks, the National Asset Management Agency (NAMA, aka “bad bank”) the EU, ECB and IMF, with no way to repay it.


According to a recent Business Week article, Spanish banks hold 30 billion Euros ($41 billion) of “unsellable” real estate loans. Just like in the US where smaller banks got hit hardest, small and mid-sized Spanish banks did too. In addition, about 308 billion Euros worth of Spanish loans are ‘troubled.’ Home prices in Spain are off 28% from their April, 2007 peak, with land values in the outskirts of urban areas, down by as much as 75%.

In economic desperation, the public elected conservative party leader, Mariano Rajoy, as Prime Minister in the end of 2011 who promised to lead Spain to economic recovery, by invoking austerity measures in return for backing to help the biggest Spanish banks.

Meanwhile, the top six Spanish banks sit on $33 billion of foreclosed assets having set aside 105 billion Euros in write-downs against bad loans since 2008, with another 60 billion Euros to come. The backdrop is a 23% unemployment rate, triple its 7.9% May, 2009 level. Property transactions continue to decline. Foreclosures keep ramping up. The gap between what banks want to sell foreclosed or troubled property at, and what investors are wiling to pay continues to widen, forcing more small and mid-size banks to buckle under larger than anticipated losses, which in turn squeezes liquidity out of local usage.


According to an SEC report from the National Bank of Greece (NBR) for the year ending 2010 – loans to businesses and households were expected to “remain under considerable pressure…[due to] “downward pressure on household disposable incomes and firms’ profitability from the austerity measures… are likely to impair further demand for loans.” They weren’t kidding. In order for the NCB (or any bank) to reduce its dependency on ECB funding, it has to reduce loans to its own economy.

The ECB agreed to accept worse collateral (with junk ratings), including bank issued bonds with Greek government guarantees (under a May, 2010 rule change for all member countries). The ECB bought Greek (and other) government bonds in the secondary markets, to support their value and thus, their value as loan collateral. As with the Fed’s QE measures, Euro-style – this only perpetuates a fantasy of demand.

After four rounds of austerity measures, nationwide protests, 110 billion Euros in IMF and ECB bailouts to keep bondholders (and banks) happy, escalating interest rates driving borrowing costs higher, a downgrade to junk, and a Prime Minister swap; Greece remains in tatters with more pain to come.

Italy and Portugal

Last summer, S&P warned it would downgrade Portugal if it didn’t play ball with the IMF and EU over a 78 billion Euro bailout. So Portugal towed the austerity line. Its economy deteriorated. S&P downgraded it to junk status.

The IMF and EU declared that Italy too, needed ‘structural reform’, meaning public austerity and privatization.  National assets went up for fire-sale, as they did in Spain and Portugal, to the highest international bidder. Now, the high borrowing costs the government faces as a result of bolstering the banking system, paying bondholders and selling infrastructure, has resulted in more downgrades and dim prospects.

According to the Italian Central Bank, 500 Italian cities are facing losses on derivatives contracts. JPM Chase and Banco IMI are accepting Italian government bonds as collateral, rather than less risky US Treasuries or cash, certain that the ECB will step in to buy, and thus prop up, Italian bonds if needed, as they did in August, 2011.

As Greece showed, using high-cost sovereign debt as collateral leads to more bailouts to ensure big lenders get their money back. JPM Chase, having weathered the US subprime crisis with support from the US Fed, isn’t about to lose on that bet. Meanwhile, several Italian towns, the City of Milan and the Tuscan region, are suing the big American, German, Swiss and French banks over derivative losses and misleading asset purchases, who will likely get bailout money anyway.

Bailout Economics Doesn’t Work

ECB bailout money didn’t (and won’t) go towards helping any European country’s local economy, any more than it went to aiding the mainstream US economy. The ECB and IMF, at the Fed, US Treasury and US administration’s urging, camouflaged the insolvency of European banks, perpetuating losses with bailouts, and forcing cowardly governments to support them, while turning a blind eye to boosting core economies.

Meanwhile, banks with access to the ECB’s ‘window’ are taking the money and immediately putting it back into the ECB as reserves. Overnight deposits at the ECB continue to break records, currently hovering around 500 billion Euro ($640 billion). As in the US, European banks aren’t using that liquidity to help fix local economies, but hoarding it to preserve themselves. The amount on reserve is 98% of the total made available in emergency 3-year loans in late December at 1% interest; banks get 0.25%, which means they are paying 0.75% interest for the loans, far less than the market would charge them.

The die has been cast. Central entities like the Fed, ECB, and IMF perpetuate strategies that further undermine economies, through emergency loan facilities and  bailouts, with rating agency downgrades spurring them on. Governments attempt to raise money at harsher terms PLUS repay the bailouts that caused those terms to be higher. Banks hoard cheap money which doesn’t help populations, exacerbating the damaging economic effects. Unfortunately, this won't end any time soon.

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economics1996's picture


"Governments have too much debt, and not enough income. That’s only a fraction of the story." 

This thinking is economically backwards.  The sentence should read "Governments are spending too much and running huge deficits."

In the USA for the past 65 years we have collected about 18% of the GDP in taxes.  90% top tax rate, 70% top tax rate, 28% top tax rate, it does not matter, we collect about 18% of the GDP in taxes, it goes up in good times, and goes down (today its 14.4%) in bad times.  We economist know this, but this seems to be a mystery to the public.

So the proper way to express a government debt is the bastard politicians are fucking SPENDING TOO MUCH MONEY.

Will these dick head economic illiterates ever get it right?

Table 1-3 

Top tax rates.

For the geeks the R2 is about fucking 0.08 correlation between top tax rate and taxes collected.


LawsofPhysics's picture

I agree, shut down THE ENTIRE GOVERNMENT (all branches and ALL departements) and let's find out out precisely what the value of everyone's labor really is.  Fucking bring it.  With no military, no police, and a well armed populace I promise you society will be considerably more honest and polite.

Wake the fuck up dude, eCONomics is not attached to any REALITY, the entire economic system depends on exponential growth WHICH IS NOW IMPOSSIBLE.  This is a FACT and the underlying reason why governments around the world have been taking on massive debt or printing/monetizing.  China has been doing it 100-fold, and people look to this SOCIALIST state as a GOOD example of what the future holds, what the fuck?


Fuck you all, bring on the collapse fucknuts, I know what the value of my labor and that of my employess, fucking bring it.  FYI- sold another 4 tons of pecans to a Chinese company, made them pay up front again and my company will be exchanging some of this paper for physical and more land for planting soybeans.  Hope those soybean prices hold.  People are really fucking stupid, they what government services and protection, but they don't want to pay for it.  Fuck 'em.

Bindar Dundat's picture

Canada is quiietly cutting back expenses of Government by a full real 10% over the next five years. They have a majority Government and the will to make it happen. Everything is being cut back by at least 10 points......Long the Loonie!

economics1996's picture

Federal, state, and local governments consume 45% of the GDP, in the 50s it was 26%.  That is why we are drowning into the abyss.  Government produces NOTHING.  Government takes from others and redistributes the wealth.  We would be better off without government in everything but the military, courts, cops, and jails.

LawsofPhysics's picture

"We would be better off without government in everything but the military, courts, cops, and jails."

Look around fucknut, a lot of the technology you see today is the direct result of government work and investment.  Sorry idiot, you can't have your cake and eat it too, better learn to defend yourself fucknut.

Another typical hypocrite sheep.  Stay healthy so you make good soylent green.

WonderDawg's picture

Dude, take a deep breath. You're mighty quick with the "fucknut" label. I understand we're all stressed (or at least, those of us paying attention), but not everyone who sees things slightly different than you is a "fucknut". Other than that, I agree.

LawsofPhysics's picture

People need to wake up with their "I want government to do this and that, but not this and that, and I only want to pay so much for it".

The "fucknut" label is more to wake these fucking hypocrites up.  There are some serious costs associated with the current military and police intervention AROUND THE FUCKING WORLD.  In addition, people have no idea how much THE GOVERNMENT subsidizes the FOOD THEY EAT.  End these subsides and you will have a 100-400% increase in food costs (remember there is already 45 million on the SNAP program, so the COSTS for this program go up as well).  

Stax Edwards's picture

I have a big part of my family that farm corn and soybeans for a living (have for generations) and they say the subsidies are for big operations and they are a joke for real farming.  They say they get no subsidies and feel it is another .gov winner picking outfit that rewards connected big farm operations.  They say they see no need for the subsidies and wish they were not a part of the federal budget.  What am I missing here, thx.

LawsofPhysics's picture

"What am I missing here,"

That depends on who the "they" is that you are refering too.   Depending on your operation, you must know that even in good years this is an expensive and hard way to make a living, especially depending on what mother Nature does and the input costs of diesel fuel, fertilizers, taxes, pesticides, maintenance, and labor.

Stax Edwards's picture

My family says the "subsidies" don't come their way, they farm for real and sell at market prices like any small business would. You claim all of our food is subsidized 100-400%.  What am I missing here?  I.E. is the subsidization you speak of simply a way to reward campaign donors for the mega operations or what?  My family says the subsidies are bullshit and those that suckle from the .gov teat would be out of business should they have to be competitive like real farmers not privy to .gov funding. I fully realize it is a hard business, they work their asses off and are deep in hock to the bank for farm equipment, etc.  Please explain your statement that these subsidies are somehow essential to americans food prices, cause they tell me it is bullshit winner picking by .gov and they do fine without it.

LawsofPhysics's picture

Who do they buy their fertillizer from?  Who do they buy their diesel fuel from?  Who do they buy their seed stocks from? The international conglomerates (monopolies) that provide these items (Texaco, Dupont, Monsanto, Cargill, etc.) are ALL on the government tit via numerous tax-breaks and SBIR/STTR funding pools for the supposed R&D they do in MANY areas.

For example, unless your family is maintaining their own heirloom seed stocks (and this is a shitload of seeds and a tremendous effort in and of itself), then the seeds they are buying are government subsidized.  This help?

Have them pay down as much of the debt as they can, those banks will come a calling when the SHTF.

Stax Edwards's picture

Thanks for the enlightenment, tempered with your statement below:

There are many examples of "governments that fund ONLY military, courts, cops, and jails."  They are called facist states typically ruled by dictators.  Maybe that is what you want for America, but not me.

So then you acknowledge we are in fact fascist (subsidies), it is all a matter of which team (red or blue) that you want your fascism to support, correct?

Cognitive dissonace anyone?

LawsofPhysics's picture

You got it.  When all the tax breaks, government research support, and other back door handouts to these huge agricultural monopolies ends, all of the cost will be passed on to the end users like your family.

Again, have them pay down debt now or switch the debt to local banks with no connections to wall street.  Have them do this ASAP, this is what I did.  A local bank is much less likely to come a calling when you are the ones feeding locals who would otherwise starve and hang those same bankers.

Stax Edwards's picture

That is already the case, they are called "XXX Co. Equity" and they run the local grain elevators generally speaking.  Thanks for the quick education, I am completely out of their loop but know it is all local finance wise in their part of the world.  I mostly trade equities and to a lesser extent bonds.  I know they have a disdain for "subsidies" because they feel it is another form of wealth distribution that they are not a part of benfitting from.  I have a topic of conversation next time we talk about whether or not trickle down effects are to their benefit.  Believe it or not, they say prices going sky high typically suck because they get pressured on the margins.  Thanks LP!

LawsofPhysics's picture

Margins always matter to people who produce goods and services of real value.  The world is about to experience a great reassessment of it's value system.  My anger comes from doing the right thing, all the while watching irresponsible behavior be rewarded and my margins compress.  I call bullshit on the whole thing.  Fucking bring it all down, fine with me.

Green Leader's picture

Your folks should read this book "More Food from Soil Science"

It's simply awesome.

LawsofPhysics's picture

Read it, lots of good ideas with absolutely no metrics for how many people you could really feed.  In addition, Dr. Tiedjens work points out another crisis that is rarely addressed, the mineral shortage.  Yeah, unfortunately plants need more than water, light, and dirt.  It is a bit more complicated.

Hohum's picture


That's right.  For example, your food, particularly your meat, would become MUCH more expensive.  So, as some of you contemplate the libertarian dream, perhaps you should also contemplate a near vegetarian diet.

LawsofPhysics's picture

Well, I butcher my own meat from the pigs and goats we have, so I am not sure exactly who your comment is directed towards.  But you got it right.

malek's picture

Another believer of "the internet wouldn't exist without the government" urban myth... Yawn.

LawsofPhysics's picture

There are many examples of "governments that fund ONLY military, courts, cops, and jails."  They are called facist states typically ruled by dictators.  Maybe that is what you want for America, but not me.

QuietCorday's picture

Hummm ... sorry to be stinky here, but rather a lot of fascist states, or states ruled by dictators, fund a heck of a lot more than just military, courts, cops and jails ... in fact, you could say they are rather known for funding a whole heap more than that.

Take Libya under Ghaddafi for example (I think you could say he was a dictator), the state funded or subbed almost everything. There was free health care, free education (at home and abroad up to postgrad studies), interest-free housing loans, free land for farmers, subsidised electricity, and subsidised bread -- to the extent Libyans threw it away or feed it to cattle. They subsidised the cost of buying cars and tractors, and gave newlyweds an allowance for housing. They also profit-shared the oil revenues amongst the people.

Then in the more "traditional" fascist states, the state tends to fund trade unions, youth groups, "charities", big business, building projects, newspapers, the film industry, leisure resorts et al ... fascism is, traditionally, a merger of state and corporate power whlst co-opting labour blocs into the "system". It tends towards a total "capture" of social, economic and cultural life.

I mean, look at North Korea. It is a dictatorship, but the state even funds embroidery studios. 

4horse's picture

. . . yes: but then again canada is of course a totally separate enitity from u.s.

whose immunity's an autonomous bloodbank circulating now so far away from its uk Bank Of England

LawsofPhysics's picture

And I yours, now get back on the wheel and run.

Vergeltung's picture

A bit early for booze in the coffee, no?

(I agree with what you said).


HungrySeagull's picture

Pecans did not do very well in some of our trees. I think about half is rotted this winter.

How did you do in regards to net crop?

LawsofPhysics's picture

I was fortunate to form a relationship with an asian several years ago who is well connected and helps me get over the hurdles associated with importing into a corrupt SOCIALIST society (amazing how many people forget what China really is about).

Regarding the pecan groves, we did okay and sold almost everything, BUT we did lose almost 30% of the older trees in one location in southern Georgia.  Lack of rainfall (we don't irrigate pecan groves) resulted in these tree literally shutting down and becoming susceptable to many things due to the brittle timber (termites or a good strong gust of wind for example).

The average sheep is simply unaware of the upcoming stress mother Nature is going to put on food production.  Specifically fresh water and liquid fuels (which the government has been subsidizing for quite some time) will be a big problem for many moving forward.  There are look of good ideas out there regarding farming that does not involve pesticides or commerical fertilizers but NO solid data on how many people these approaches can really feed.  Guess we will find out the hard way eventually.

Seriously considering planting some peanuts strictly for the oil to run in diesel engines.  I am getting more requests from local customers lately.  Ultimately I think local economies is where we are all headed as central planning and the one world industrial military complex (U.S. Military U.N. and NATO) runs out of other people's money and labor.

poor fella's picture

Wow, everything you're doing has great foresight - quite jealous. Thought about olives or sunflowers for oil to run diesel motorcycles... Anyway, a tiny bit hypocritical to send pecans to China through a 'fortunate' relationship? Shipping nuts around the globe - while talking about food production stress? Fuck that, sell them local. Nothing against making some coin before the SHTF - but we all should try to become less of the problem in the meantime.

It comes down to your final statement - "Guess we will find out the hard way eventually."


LawsofPhysics's picture

"Wow, everything you're doing has great foresight"

I wish, my margins are shit.

holdbuysell's picture

"People are really fucking stupid, they what government services and protection, but they don't want to pay for it."

Spot on. When most people were children, they were constantly told by parents that they couldn't afford this or that. Or, the kid would have to wait and save up for something they wanted. In other words, as children, most were taught to live within present means, to delay gratification and to work for it first.

Then, we become adults and suddenly think we can have this infinite piggy bank called the government...and get something for nothing. And politicians, who presumably have household budgets, could care less about sticking to a budget at the country level. Maybe as individuals they do (or some do), but collectively they are an abysmal failure. The people's failure.

It's a very sad situation, indeed. And Tyler's right, people get the government they deserve. Until the people wake up and realize that they are cutting their own throats by demanding something for nothing, this whole project is doomed, as those that do produce will eventually pull an 'Atlas Shrugged' and get the hell out.

MassDecep's picture


"Hope those soybean prices hold."

Dude, my opinion and strong gut feeling is we are heading for a major food crisis among all the rest of the chaos.

My advice, take it or leave it, "Store up on storable foods". The prices are going to soar. Just an incident with Iran is going to shot oil prices through the roof.

The domino effect of this incident alone, is staggering.

And the handlers need a good war now....

Not fear mongering, just a word of advice; extreme strong gut advice.



MillionDollarBonus_'s picture

Sorry but this article is bullshit. The financial services industry forms a large part of our economy and our top tier investment banks make markets in securities around the world. A bankruptcy of one of these institutions would be a complete disaster and would cause havoc throughout the global economy. Sorry, but the truth is that these institutions are simply TOO BIG TO FAIL.

economics1996's picture

That was awesome!  You got talent.

LawsofPhysics's picture

I agree and have always suspected this guys writes for John Stewart.  pretty good stuff.

LOL "financial services".  What is the real value of the sector again, I mean aside from bankrupting the country and continuing the SOCIALIZE PRIVATE LOSSES on the backs of the productive taxpayers while those who took the risk kept the "profits".  Fuck the paper-pushing fucknuts, bring on the collapse.

LongSoupLine's picture



Million Dollar Bonus,

That is some of the best sarchasm I've read in a while.  Good one!

Everybodys All American's picture

I submit JPM, Goldman, Morgan Stanley, Citi, and any other failed banks should have been let go and declared bankrupt. The deposits should have been insured and then moved to other profitable banks. If we would have taken this course of action we would be far better off and the whole systemic crisis would be over by now. Sovereigns now are at risk, AAA ratings have been lost, and everyone is now gaming the capitalist system for who can make the best out of a corrupt outcome.

MassDecep's picture

Either the King of SARC, or the King of Stupid.

I cannot decide...........

Hohum's picture


Thanks so much for being "sorry." /sarc

Snakeeyes's picture

Thank the Princeton Keynesians for this (athough they have moved to Columbia and other schools): Krugman, Stiglitz, DeLong (out at Berkeley) and many other MIT/Harvard/Yale/Princeton economists and students.

The belief is that 1) government spending should always increase in times of economic slowdown and 2) you can keep borrowing and printing.

Their evidence? The Great Depression. And some isolated events from smaller economies.

It is really a faith based system.

economics1996's picture

The evidence from Rothbard’s classic “Americas Great Depression” shows the opposite.  Government spending increased at all levels from 1929 to 1933, federal, state, and local, and the economy still collapsed.

The Federal Reserve increased FOMC buys from banks, increasing the monetary base, and the economy collapsed.

If you look at the evidence it is clear government made the economy much worse, 24.9% unemployment in 1933, that it would have been with no government involvement.

The whole Keynesian school of thought is just a justification for governments to spend and the Federal Reserve to steal from people. 

There is no justification for government spending in bad economic times, but there is a lot of justification that governments should spend LESS in bad economic times.

When you get laid off from a job do you spend more or less?  Why is the government immune from the economics that govern us all?

LawsofPhysics's picture

The Federal reserve is NOT the Federal government fucknut, it is a PRIVATE banking cartel.

Dick Gazinia's picture






And now back to our regularly scheduled show.

847328_3527's picture

Is Rothbard's book, Great American Depression in pdf for free on the web? I'd like to read it.

His excellent read, History of Money is free at:


Well worth the time to read. You can also listen to the entire book on You Tube.


QuietCorday's picture

You know, it always makes me think this.

I am sure, back in the day, I remember reading that Keynes thought the upper limit of government spend during a moment of crisis should be about 23 percent of GDP and no more.

I wish I had kept a reference of where I read that. I keep meaning to go back through my books on Keynes and try and find it.

Stax Edwards's picture

Thanks for contributing SE, academics who actually get it lend credibility to the joint.  We need more visible players willing to stand up and say enough. Having one prestigious enough to testify the truth to our congressional critters is a good thing.  Thanks for continuing to show up.

BTW, you only get shit from commenters because you link to your blog on damn near every post.  We know where it is, and I for one think it is a great reference for RE.

fonzannoon's picture

"Unfortunately, this won't end any time soon."

BINGO we have a winner. 

falak pema's picture

nomi prince... well said. Or princess.

Stax Edwards's picture

You got to question an organization that rates shit mortgage paper (designed by GS et. al. to fail) AAA but now the United States government ranks below that level.  Hmmm, this seems like an awfully convenient tool for the elite.  The crap mortgage paper was great till it wasn't.  Now that .gov has moved all the bad debt created by these entities to their balance sheet they are dropped below AAA.  Oh, and the convenient fact that S&P is McGraw Hill also, so these same people write our textbooks that our children learn from.  It is amazing how all the pieces fall into place and all the levers of power lead right back to the same group.  Curious no doubt.