Guest Post: So Why Is The Initial Reaction Of The S&P Downgrade Of Treasuries For Treasury Bond Prices To Go Up?

Tyler Durden's picture

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Flakmeister's picture

Maybe because fat rats can only squeeze through big holes....

BaBaBouy's picture




AND Commedian Jay Carney.


Fecking Clowns in charge...

MillionDollarBonus_'s picture

People laughed at me for my bullish stance on the long-bond. I boldly pronounced my support for president Obama and those congressmen who had the courage to make the tough choice of raising the debt ceilong, despite the inevitable childish attacks from the doomer libertarians. And in the end I was rewarded for standing up for principles of bravery and patriotism.

Flakmeister's picture

Good for you... take your profits and run before the Bernank speaks tomorrow

Greater Fool's picture

Ha. Just rotated some out of cash and Tsy's to buy equity with a higher weighting on growth stocks.

Will do it again if we see another big leg down. Love being able to buy stocks at reasonable prices for a change.

Flakmeister's picture

Energy sector MLPs are very attractive at these levels...LINN, PSE are on sale. Straight equities like EXXI got bitchslapped and I have been buying...

legal eagle's picture

I am assuming you missed the sarcasm button, since your entire post is horseshit. Did the right thing, thanks for the chuckle. Yes, you shall be rewarded.

bigdumbnugly's picture

this bugs me about how cnbc and others are attacking the s&p downgrade...

their main argument is:  the US can't default because it is the reserve currency and can print any amount of money needed.  therefore isn't this downgrade silly?

i ask, if this is so, why bother having s&p, fitch, or moody's rate them anyway?  what would be the purpose?


HpDeskjet's picture

And the funny thing is, this argument is not even true... Printing will cause interest rates to rise immediately (see what happened during qe1 and 2) and with the short maturity of the US Gov Debt, this equals suicide

Anonymouse's picture

Spot on.  If the arrows were working, you would have a +1.


Absolutely disgraceful.  The administration is the worst of all, and showing no leadership.  Simply whining and complaining with fake anger.  Unless the anger is real, which shows absolute cluelessness.  Actually I think I'll go with that

CNBC's S&P and Liechtenstein bashing shows how 1) clueless and 2) conflicted they are.

Now they all are stumping hard for QE3.

What fools these mortals be

Debtless's picture

Other than the fact i've been all in on VXX the last 4 days, i revel in the fact that the banks are having their little dicks handed to them again today. And that their corrupt executive's personal shares are falling like stones.

steelhead23's picture

I would cheer loud and long if the personal wealth of the likes of Fuld, Dimon, and Blankfein were to suffer losses.  Unfortunately, I doubt this will happen.  Instead, unless the TBTFs actually fail, they will get a paltry couple mill each to ease the pain.  Quelle horreur!

I gotta come out of the closet here on ZH - I happen to believe that for-profit banking inevitably becomes a Ponzi scheme, that finance is a utility function in the economy, and that true economic freedom will only come when all commercial banks are organized as not-for-profit entities.  Yeah, I know you true believers disagree with me.  Look around you, then carefully dissect my thesis and show me how wrong I am.  That is, right after you short the hell out of the financials!

Mr Lennon Hendrix's picture

What is the derivative for "Hope and Change"?  It's not "zero", is it?

Shell Game's picture

On a long enough timeline it is...

Misean's picture

It's a bank run. A dash to cash and the most liquid securities.

MsCreant's picture

As in "The Fed will always buy it back?"

How bout the FED is buying this shit and can make it any price they want it to be???

Spitzer's picture

This is how bubbles pop. Buying climaxes end bull markets.

MsCreant's picture

So then what of gold, now?

TonyBoomBoom's picture

Are you a Misesian? Give the man his credit by at least calling yourself the proper name for a follower of his!

Misean's picture

Yes, well, a man with your handle such as yours is one who's advice on handles I shall take very seriously.

TonyBoomBoom's picture

I was so absorbed in my quip about your handle I forgot to leave out the point that I agree with your sentence which summarized the article beautifully.


And no matter what some mean rating agency says, USA will always be AAA in my heart.

IQ 145's picture

Well, isn't that just precious. 

Westcoastliberal's picture

Checked with Orbitz, all flights to both safety and quality are all booked up.  What now?

Tortfeasor's picture

For only four easy payments of $39.95, Simon Black has your answer.


goldsaver's picture

Why? easy, the HFT algos have no other programmed options.

Spitzer's picture

Because this is how bubbles pop. They must go beyhold your wildest dreams like treasuries are right now.

jjsilver's picture

Flight to liquidity my ass!! These criminals create your reality.


Greenspan: US "Can Pay Any Debt It Has Because We Can Always Print Money"


Anonymouse's picture

Now we can see why he is such a genius.  Greenspan (and his incompetent hunchback lab assistant The Bernank) have pulled off what no evil genius could do

- Not Hitler

- Not Stalin

- Not Mao

- Not Dr. Evil

- Not Lex Luthor

- Not Mojo Jojo

None could defeat the USofA.  But Greenspan did it in barely over a decade

Greenspan: "Just print ...." <pinky to corner of mouth> "one quadrillion dollars!  Bwa-ha-ha!"

besnook's picture

actually the dollar has been devalued making everything paid for in dollars cost more.... like gold.

Gringo Viejo's picture

US Treasuries...Flight To Insolvency.

Missiondweller's picture

Yes. Break up the money center banks. Same way we did with AT&T or Standard Oil. Trust busting is what we need to re-learn.


And bring bacl Glass-Steagal.

Dr. Engali's picture

We need to break up congress too.  -The more corrupt the state the more it legislates- Cornelius Tacitus

Downtoolong's picture

Policy choices are clearly between a deflationary deleveraging/purging of malinvestment or a reflationary protection of the status quo international money center banking system to the detriment of wage earner and pensioner standards of living.

Is there any doubt which way our government leans on this one? That’s why I’m still baffled a bit by the big flight to Treasuries (negative real returns) today. Maybe it’s more about the answer to this question: When the Fed does announce QE3, what will they be buying with all the new money they print?   

IQ 145's picture

When the DOW goes down, the T's go up. This is old, old, school wisdom. It's been this way forever; or a long time anyway. When you dump your equity position the money has to go somewhere. The probility is that this is a short term phenomenon. The long Bond should start down-ticking later this week.

Alpha Monkey's picture

I wonder if new wisdom will say $ needs to go into G instead of T.

Alpha Monkey's picture

If insider selling has been mostly on the increase, and everyone else seemed to be withdrawing, who was doing the buying to support price levels?  Perhaps a significant portion of the market is owned by the central planners who are just sloshing money back and forth.  After all, isn't it their computers that are dictating most of this?

Payable on Death's picture

Washington gridlock comes from the people. The fix requires cuts to SS and Medicare. Demographically and politically, these cuts are impossible. I watched 2.5 hours of Ann Coulter on Book TV this weekend, and two (othwerwise) conservative fellows called in saying they deserve their govenrnment benefits. I have solidly conservative friends who want their promised SS and Medicare. They paid in and they want the promise kept. These are the people that should be (have been) on the side of austerity. It is not relevant whether they are correct, all that matters is that every day 1000s of people join their ranks simply by aging. At the other end of the spectrum how do you think food stamp recipents feel about budget cuts?

BTW, I remember Boehner and Ryan both talking about "having a conversation with the American people". This was after the 2010 election and as they were being challenged about entitlement reform. They know change this big must have the support of the people. The debt ceiling debate put these issues front and center, and for all I can tell, the take away is that the Tea Party is bad--nothing about the fundamentals.

There are 2 paths to the fix: 1) orderly and by demand of the people, as Canada in the late 90s; or 2) by the market, which is to say some sort of financial reset.

G. Marx's picture

Ahh, a proud toady of the state and guardian of the establishment. I've always wanted to ask your ilk, what's it like licking the boot which rest upon your neck?

slewie the pi-rat's picture

what about "Frost National" dude?

"This downgrade exposes  the limits of U.S political capacity and mandate to manage the international financial system."

okey-dokey.  thank you, texas!


hangemhigh's picture

TO: by slewie the pi-rat
on Mon, 08/08/2011 - 15:52

"This downgrade exposes  the limits of U.S political capacity and mandate to manage the international financial system."

slewie: if you'll allow me to piggy back your comment, sir: 

"The S&P downgrade was not as much a comment on the numbers of credit service as a comment on the political process"

"A nominal default of Treasury obligations is not going to happen. Yet, a real default as a currency event is the risk. In order to save the currency,  we must sacrifice the money center banks"

 "European banking system assets far exceed those justified by domestic activity. This over-reach by the legacy system is compounded by the various erroneous Keynesian monetarist schemes of credit promotion that have now saddled the U.S. and European system with uneconomic credit."

"In the near term an S&P downgrade of Treasuries lowers the probability of a U.S. bailout of the European banking system"

this is one of the best commentaries i've seen on this rats nest of disinformation:  the down grade is based on political factors. the problem is the brain dead morons that we the people put in office. they are too dumb to see that what's at risk is the currency.  the currency is the basic share of the home grown enterprise that we call america.  to save the currency you have to jettison the banksta crime cartel. 

also of note, this is the first time i have seen anyone use the spot on term "keynesian monetarist schemes" which perfectly describes the mangled, ad hoc mess that  has empowered the looting class.   

finally, much of what has occurred (QE2: $630B to ofshore pd's) has been about using the euro banksters to save the reserve currency's bacon.  if the 'frost national dude' is right, that is now less likely.

hope you don't mind the piggyback, slewie, my man, and you're right about the source of this message....lone star homies don't be  happy..................



TimmyM's picture

Why thank you "hangemhigh". Sometimes I rant.

Duck's picture

Aren't Treasuries denominated in U.S. dollars too, or did I miss something?

phaesed's picture

To above.... US Dollars are actually treasury derivatives.... but that's a different topic. But the constant rant against Treasuries continues to make me laugh.... after all, why is everyone shorting the bull market?

mendigo's picture

the msm and politician are blaming S&P for market behavior

so the entity that first acknowledges the problem is actually the cause of the problem - if it weren't for S&P everything would be just peachy

as krugman points-out S&P was negligent in it's valuations last fiasco so what the fuck is their problem?

mendigo's picture

where oh where is our guardian angle ben - has he forsaken us?

i thought all things could only fall upward

i think it is something tyler said

Djirk's picture

Duetschland uber Alles...Angela mein Liebe

TheJudge2012's picture

People don't rush to put their money into treasuries with a downgrade. That's nuts. But colluding central banks do with cheap money they print to prop up the dollar.