• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Equities In Dallas And Sovereign Debt Ratings

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Sat, 08/06/2011 - 22:41 | 1532179 Anonymouse
Anonymouse's picture

Wasn't it "munis in Dallas"?

Sun, 08/07/2011 - 06:58 | 1532438 silvertrain
silvertrain's picture

I thought it was "Debbie does Dallas"

Sat, 08/06/2011 - 22:57 | 1532188 Freebird
Freebird's picture

Good overview. France will get a downgrade - within 2 weeks?. Germany cannot cover all of Europe - resistance is already prevalant. Which leaves not much but paper creation, extended ponzi schemes. If these are not signs to purchase more pms ... Chf & yen will be strong until they're not - CB actions will sooner or later force holders to the ultimate currency.

Sun, 08/07/2011 - 00:17 | 1532191 sellstop
sellstop's picture

yup

Sun, 08/07/2011 - 00:23 | 1532196 Kimo
Kimo's picture

S&P wanted some leverage over France.... now they have it, in spades!

Sun, 08/07/2011 - 00:45 | 1532216 slewie the pi-rat
slewie the pi-rat's picture

i wonder if d. strauss-kahn knows anybody upstairs at the rating agencies? 

wouldn't that be a sweetheart of a french honey trap?  L0L!

Sun, 08/07/2011 - 01:03 | 1532232 kito
kito's picture

please take naked capitalism off of your links. the author is spinning this against s&p, says because the u.s. can print from here to eternity the u.s. shouldnt have lost its AAA rating. total jackass. there are so many other links deserving of attention, this is NOT one of them.

http://www.nakedcapitalism.com/2011/08/will-sp-downgrade-be-another-y2k-scare.html#Subscriptions

Sun, 08/07/2011 - 11:57 | 1532689 InconvenientCou...
InconvenientCounterParty's picture

re: this article at Naked Capitalism. worthy of censure?

The author is makes a case that the ratings agency statements and actions have clearly diverged from their charter for the last 10 years and probably 20. That record certainly weakens the foundation of credibility and implies a weak market reaction per the headline.

Attribution of the latest statement by S&P to "political capture" is asserted, this time from the GOP. So we have an open assertion. Afraid yet?

Selective application of irregular protocol creates the dissonance this time with S&P. It has nothing to do with objective truth. Ultimately the worth of the ratings agencies themselves are in question.

The well known alignment between the ratings agencies and the "old money" GOP WRT Dodd-Frank is pretty intriguing. The political gain for the core GOP is being revealed as Obama and the unruly, right wing of the GOP both get splattered by the talking heads today. This downgrade will be one of the sticky memes this cycle for the moderate GOP & Mitt Romney.

If it wasn't scripted, it should have been.

 

Sun, 08/07/2011 - 01:26 | 1532260 papaswamp
papaswamp's picture

Insomnia bitchez!

Sun, 08/07/2011 - 01:58 | 1532285 baby_BLYTHE
baby_BLYTHE's picture

Insomnia despite intoxication, such a bitch

Sun, 08/07/2011 - 02:09 | 1532289 papaswamp
papaswamp's picture

aint that the truth!

Sun, 08/07/2011 - 02:12 | 1532291 zorba THE GREEK
zorba THE GREEK's picture

"Insomnia despite intoxication, such a bitch"

At least now I know I'm not alone. All I can think about is Asian markets opening Sunday night and U.S. markets opening Monday A.M.

I hope I sleep before then. I guess it beats being bored.

Sun, 08/07/2011 - 01:51 | 1532278 Fed_Printstone
Fed_Printstone's picture

I have to admit, I am surprised at how big the GDP of Holland is, I really just underestimate it, but don’t see any reason they would have to worry about their rating

Yeah, we Dutch can fool a lot of people like this. Not many folks outside NL realize though that our own housing "market" is a ticking timebomb of nuclear proportions. We have as a country, mortgage debt amounting to 3x GDP and our three largest banks accounting for 4x GDP. All our banks are heavily into RE. Mortgages of >100% financing have been the norm since the run-up started in earnest the early 1990s (since there isn't as much as a freaking garden shed to be had for less than 4x gross yearly income). 

Now prices have been going sideways for about 2 years running, with both local and national gov'ts enacting measure after measure to -as they say- "kick-start the housing market again."

Yep, AAA-rated (or more aptly named "HAHAHA-rated") Netherlands might just be the black swan that you never saw coming.

Sun, 08/07/2011 - 02:06 | 1532287 Quixotic_Not
Quixotic_Not's picture

AFAIK, the only thing AAA at this point is PMs.

Cash is trash, and housing is nothing but an albatross around one's neck...

When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you... you may know that your society is doomed. ~ Atlas Shrugged

¿Tienes plata gringo?

Sun, 08/07/2011 - 02:15 | 1532294 zorba THE GREEK
zorba THE GREEK's picture

Attention all investors: S&P just raised PM's to AAAA+ rating. That's all for now.

Sun, 08/07/2011 - 02:20 | 1532301 Quixotic_Not
Quixotic_Not's picture

Hahaha!

Schadenfreude is a dish best served cold!

Sun, 08/07/2011 - 07:39 | 1532463 WestVillageIdiot
WestVillageIdiot's picture

Come on, Snake.  Jack Daniels has earned his AAA rating.  No?

Sun, 08/07/2011 - 02:55 | 1532314 jonjon831983
jonjon831983's picture

Just on a quick glance. Japan's political environment seems to be quite volatile. Every now and then a headline seems to pops up about a top level politician quitting or getting fired...

Sun, 08/07/2011 - 03:05 | 1532317 Quixotic_Not
Quixotic_Not's picture

If I had the misfortune to be a politico in Japan in the present tense, I'd fire myself and flee the island.

Then again, I don't suffer from narcissistic personality disorder coupled with illusions of grandeur, so I have -0- appeal to the frontal lobe damaged sheeple...

Gives a whole new level of appreciation for the adage glowing approval in the polls though  ;-)

Sun, 08/07/2011 - 03:24 | 1532329 MrPoopypants
MrPoopypants's picture

Germany in drag, playing bass:

www.youtube.com/watch?v=WgiDINcZ-q4

Sun, 08/07/2011 - 05:03 | 1532380 Yen Cross
Yen Cross's picture

 Mouth Shut mode< comes to MIND!

Sun, 08/07/2011 - 05:21 | 1532385 kaiten
kaiten's picture

Well, if France is downgraded then EFSF is out of play, and the only option is ECB printing as Germany is not big enough to carry the whole eurozone.

Sun, 08/07/2011 - 05:28 | 1532388 Yen Cross
Yen Cross's picture

My paternal Grandmother had BALLS!  I watched her take a "DEEP" Breath!  My silence is about to end!

Sun, 08/07/2011 - 06:42 | 1532424 Escapeclaws
Escapeclaws's picture

Bizarre that sovereign nations have not learned the lessons of history. The rating agencies gave AAA ratings to CMO's that merited a C because they were paid by the banks who created the CMO's and other three letter trash. Thus, sovereign nations simply need to pay the rating agencies to rate them, and voila, problem solved. France, are you listening? Learn from history!

Sun, 08/07/2011 - 07:06 | 1532440 duncecap rack
duncecap rack's picture

Your articles are always great reads. Thanks.

Sun, 08/07/2011 - 07:09 | 1532441 Smiddywesson
Smiddywesson's picture

I have to agree with the author.  The game is to extend and pretend, while the central banks stack gold.  The rating agencies are a big part of this game, so they will fight a rearward action, dragging out this slow inflation squeeze of the taxpayers as long a possible.

Despite the strength of the German economy, they have played along with all the central banks of the world, so I can't imagine they would pull the plug and do the right thing now.  They are going to continue to play for time.

Sun, 08/07/2011 - 08:12 | 1532487 ??
??'s picture

What the author fails to point out is that in advance of a downgrade the agency typically modifies the outlook well in advance. In the case of France, the current outlook from S&P is stable. Translate, nothing even remotely imminent in the way of a downgrade for France.

 

Foreign Long Term AAA -- 25-Jun-1975

Outlook STABLE -- 26-Jun-1989

(Of course it could be that the analyst responsible for France has been on vacation/strike since 1989)

Sun, 08/07/2011 - 11:11 | 1532508 DavidC
DavidC's picture

For all the headless chicken stuff that's been going on, panic here, panic there, let's not forget that at the low in 2008, the S&P was at 666 (now at 1200), the Dow was around 6440 (now around 11,450) and the FTSE around 3460 (now around 5280).

I feel more of a sense of panic over the last week than I did in the first week of March 2009. Things ARE worse but the market has a long way to fall even to get back to March 2009 levels.

Do I think it will get there again? Yes, definitely, but we may have some 'stick saves' in the meantime.

DavidC

Sun, 08/07/2011 - 11:12 | 1532510 Josh Randall
Josh Randall's picture

Love this ping pong game between the US and now European theaters. The US obviously stepped on a rake long ago, but if the Euro becomes more valued than the Dollar, I'll eat my hat.

The JPMorgue's stock price vs. Physical Silver is the only attraction I want to see play out

Sun, 08/07/2011 - 11:15 | 1532513 StormShadow
StormShadow's picture

Tried to buy some silver on APMEX about an hour ago. Got the following interesting message:

"Attention – Due to the uncertainty in the global precious metals markets, we will not be able to accept any additional orders until the global markets re-open in Asia. We expect to be accepting orders around 6:15 pm EST. Sunday August 7th, 2011, following the market open."

I doubt they'd do that if they thought prices were going down. Anyone else gotten such a message in the past from this or another PM seller?

Sun, 08/07/2011 - 11:20 | 1532525 hungrydweller
hungrydweller's picture

Give Tulving a call.  You can lock in Friday's prices as long as you can wire the money by Monday.

Sun, 08/07/2011 - 12:25 | 1532806 StormShadow
StormShadow's picture

Tulving? You must be rich. I can't afford their minimums.

Sun, 08/07/2011 - 11:38 | 1532578 HellFish
HellFish's picture

I saw it and went to Gainesville to buy a Krug.

Sun, 08/07/2011 - 12:27 | 1532813 StormShadow
StormShadow's picture

Yeah I thought about that. Have bought from them in the past, too. Thanks.

Sun, 08/07/2011 - 11:26 | 1532550 Highrev
Highrev's picture

Something to keep in mind if you're a bear and short (more so if you're shorting the hole!) that http://chartramblings.blogspot.com/ has pointed out: http://seekingalpha.com/article/248003-the-end-of-america-not-quite

And another chart of mine. ;-)

http://img89.imageshack.us/img89/6767/spxarmstrongcycle.jpg 

Sun, 08/07/2011 - 11:54 | 1532680 tradewithdave
tradewithdave's picture

You wrote "If France goes the ESFS goes." It's not perfectly clear where they go together, but I wouldn't bet on that, at least not unless I know where they're headed. I would bet that the U.S. Exchange Stabilization Fund is used to support Germany while hanging out the French laundry to dry.

Davr Harrison
www.tradewithdave.com

Wed, 09/14/2011 - 04:59 | 1667470 chinawholesaler
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