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S&P Downgrades US To AA+, Outlook Negative - Full Text

Tyler Durden's picture


United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

We have also removed both the short- and long-term ratings from CreditWatch negative.

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Rating Action

On Aug. 5, 2011, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. The outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service--remains 'AAA'.


We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related  fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective,  and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing. 

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.    

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term  rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.


The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently
assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.


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Fri, 08/05/2011 - 20:29 | 1528655 OS2010
OS2010's picture

Well played.  When is the next downgrade??

Fri, 08/05/2011 - 20:43 | 1528732 derp
derp's picture

NFL pre-season starts next week so who cares

Fri, 08/05/2011 - 20:59 | 1528812 Haywood Jablowme
Haywood Jablowme's picture



He's our only hope.....

Save the Republic!


Fri, 08/05/2011 - 21:17 | 1528932 Wilk
Wilk's picture

And i was expecting Ron Paul

Fri, 08/05/2011 - 21:25 | 1528974 Crisismode
Crisismode's picture

Circle the wagons Boys & Girls.


On Monday morning, make sure you have adequate supplies of TP in your bathroom.

Because, the shit is going to fly fast and hard.

And by the time the bell rings at 1600 hours, your long-term-hold portfolio will the worth the square root of negative one.


Fri, 08/05/2011 - 21:34 | 1529020 Bicycle Repairman
Bicycle Repairman's picture

Why does S&P hate America?

Fri, 08/05/2011 - 21:35 | 1529026 YesWeKahn
YesWeKahn's picture

The other way around: why does America hates S&P?

Sat, 08/06/2011 - 00:18 | 1529558 phyuckyiu
phyuckyiu's picture

Obama is done. 'The Man Who Lost Our Credit Rating'. D-o-n-e. That entity that bet 1 Billion that we would get a downgrade just got P A I D $$$$$. Major power play in action, you don't challenge the president without big guns. Stay tuned.

Sat, 08/06/2011 - 00:22 | 1529582 FEDbuster
FEDbuster's picture

I hope the Onion does a parody of the Free Credit Report commercial with Barry, Timmy and Benny playing the three dudes normally in those commercials.  Just a suggestion, if anyone working for the Onion comes here for ideas.

Sat, 08/06/2011 - 07:13 | 1529989 pupton
Sat, 08/06/2011 - 08:58 | 1530070 GetZeeGold
GetZeeGold's picture


Things to do this weekend.......

1. Buy gold.

2. Buy silver.

Prices are fixed until Asia opens...tick tock.


Sat, 08/06/2011 - 09:38 | 1530145 trampstamp
trampstamp's picture

Maybe short term. I think we may be in for a surprise when deflation kicks in and gold and silver drops hard.

I hope that we are at the bottom of a beautiful channel on the indexes. HNS played out and if you look at the weekly, we didn't close below the lower channel.

I'm telling you guys, we have been getting played by the big boys since February. They have been using the news to sell their accumulation and now that they have completely got rid of their accumulation 2 weeks ago, they loaded up on puts on the indexes and shorted them.

I still think Ben Bernanke knows exactly what he's doing. He sold a butt load of calls at the top of the indexes and bought a butt load of puts. Now that we are at the lower end of the channel and has practically got everyone to capitulate, he is now selling a butt load of puts and buying a butt load of calls until we get to the top of the channel. Genius!!!! Come on guys, how all do you think Ben Bernanke is going to clean his balance sheet of bad debt and get the USA back to triple AAA status? Not through Congress, but through the sheeple.  Ben knows exactly what he's doing and playing dumb.


Sat, 08/06/2011 - 09:43 | 1530161 rsnoble
rsnoble's picture

The H&S target is still several points lower.

Sat, 08/06/2011 - 10:54 | 1530295 narapoiddyslexia
narapoiddyslexia's picture

trampstamp, you ascribe too much power and foresight to tptb.

The first and most likely explanation for nearly all of human action is ineptitude.

The second is that the road to hell is paved with good intentions.

Third, and last, is conspiracy. Conspiracies, especially large ones, usually fail.

They are as adrift as everyone else. Recall Geithner swearing there would be no downgrade. He didn't appear to be a dumbfuck to promote a conspiracy.  He appeared to be a dumbfuck because he is a dumbfuck.

Sat, 08/06/2011 - 13:38 | 1530982 malikai
malikai's picture

Remember, Geithner could have simply been lying. S&P could also be in on the game.

I agree with your sentiments though. Usually when conspiracy is the suspect, incompetence is the culprit.

Sat, 08/06/2011 - 09:47 | 1530172 Long-John-Silver
Long-John-Silver's picture

Read what happened after the second dip in the 1929 depression (it was still considered a recession at the time).

We are now in an economic depression as well. History always repeats so if you want to know what's going to

happen let the depression of '29 history be your guide. One hint, FDR attempted to confiscate Gold because it

had become real money and the US Dollar was looked upon as junk.

Sat, 08/06/2011 - 09:57 | 1530196 GetZeeGold
GetZeeGold's picture


2.5 trillion debt ceiling raise.....that's not deflation kids.

QE3 as reported yesterday on ZH......again....not deflation kids.


Sat, 08/06/2011 - 10:18 | 1530233 Robot Traders Mom
Robot Traders Mom's picture

@trampstamp-deflation is a myth. The FED prints money consistently, just some years more than others. The only time there is really deflation is when liquidity in the bond/commercial credit market is frozen, IE Nov 2008. Even then, it is really just a brief anomoly of money in a holding pattern.

But yes, this is a diabolical move. QE3 is a bad move politically, so they will bring the American sheep to their knees until they beg for it and realize they are slaves to the FED and they are the ones running the show. Make no mistake, this country is on its last leg and people better enjoy their consumer-driven lives now because around the corner, they will be worrying about their survival...



Sat, 08/06/2011 - 10:49 | 1530282 DeadFred
DeadFred's picture

Right now America barely knows this is going on. It will take a lot more to bring them to their knees. I'm staying bearish until the masses start cashing in the 401Ks.

PS glad to see your son didn't have to sell you into slavery to meet his margin calls.

Sat, 08/06/2011 - 11:07 | 1530335 Robot Traders Mom
Robot Traders Mom's picture

@Fred-agreed and my son only has a 'play' account he messes around with. He doesn't actually have real money to spend.

Sat, 08/06/2011 - 11:35 | 1530420 Bastiat
Bastiat's picture

I'm staying bearish until the masses start cashing in the 401Ks.

They've been cashing them in for years, Fred.

Sat, 08/06/2011 - 10:20 | 1530235 Robot Traders Mom
Robot Traders Mom's picture


Sat, 08/06/2011 - 10:31 | 1530257 dwdollar
dwdollar's picture

Bernanke is an academic stooge.  I doubt he's ever made a buck in the market.  He's not playing the market right now.  He's sharpening his tools for QE3 and waiting to play his "I told you so" rhetoric.

Sat, 08/06/2011 - 11:09 | 1530339 Kavklov
Kavklov's picture

I agreed with you that the FED is manipulating yet again the markets,... I just would like to know where and how are you following up their buy/sell put and call options.


Sun, 08/07/2011 - 11:23 | 1532529 tocointhephrase
tocointhephrase's picture

Yup, paper Silver is at a discount but physical Silver is unchanged at my dealers. Even worse, he says that there is a major disconnect with the price of Paper Vs Physical and that the price is now set as to what mood he is in. I hope his Mrs doesnt say no!

Sat, 08/06/2011 - 09:34 | 1530141 tallen
tallen's picture

Saudi Markets are down 5.5% today (Open for trading on Saturday)


Will the NYSE's circuit breakers be used on Monday? I'm guessing, yes.

Sat, 08/06/2011 - 00:23 | 1529583 HoofHearted
HoofHearted's picture

How do you say, "Thank you S&P" in Italian?

Sat, 08/06/2011 - 00:32 | 1529614 rcintc
rcintc's picture


Sat, 08/06/2011 - 00:58 | 1529673 BaBaBouy
BaBaBouy's picture


The whole financail system is Korrupt and Kapput ...

Sat, 08/06/2011 - 04:23 | 1529881 spiral_eyes
spiral_eyes's picture


"Why should China — manufacturing powerhouse to the world — accept debased American currency when instead it could sell its goods to Europe, Russia, India or its own domestic market?

There is one answer to that question, and I don't like it much, because it sets a precedent of coercion and belligerence that can only end badly: America's nuclear arsenal."


Sat, 08/06/2011 - 04:42 | 1529897 tallen
tallen's picture

Love how the price move happens before the downgrade, no doubt some S&P insiders taking the opportunity to trade on this.


Gold to $1700 on the open? There are literally no sell orders on the overnight market on bullionvault. MUhahahaha

Sat, 08/06/2011 - 07:11 | 1529987 spiral_eyes
spiral_eyes's picture

$2000 this week?

Hedgies will periodically liquidate on the way up causing $50 shocks here and there to pay down losses on NFLX and LULU but i think a majority may read the macro picture and realize they have to eat losses elsewhere and sit tight on GLD. 

Sat, 08/06/2011 - 01:21 | 1529682 TruthInSunshine
TruthInSunshine's picture

It's all pre-arranged. and theater.

Think I'm a conspiracy nut? Okay, fine, but think about this for just a moment:

S&P is a U.S. based ratings agency, subject to subpoena power by the Senate and full Congress.

S&P has made terrible calls, and lacks an iota of credibility, in reality, and the same could be said of Moody's & Fitch .

So, does anyone really, truly believe that any private ratings agency (the David) could do this without approval from Uncle Sam (the Goliath), without complete and total retaliation and destruction in response?


There's a reason that everything looks chaotic and they want to panic everyone again, just like they did in 2008.

They can't use the exact same play they did then, because it's been dissected and analyzed, and too many people (if even only a small % of the population) realize that was a massive scam in order to facilitate the 5.3 trillion dollar transfer of taxpayer dollars to Wall Street and TBTF banks.


So....what purpose does this downgrade serve? It definitely serves a clear agenda. Think outside the box.  Think globally. Think about the factual plans that have been directly laid out for all to see, or that have been exposed through leaks or other means.

Gentlemen, everyone should be alarmed, but for vastly different reasons than what they want us all to believe.

This is being done, and with behind the scenes prompting by our very own government, to pave the way for the government to say "oh well, our hands are bound, and we'll be forced to cut spending on social spending now," while our same government continues to transfer the 'savings' from cuts in social programs to TBTF Banks & Wall Street.

Damn that S&P!!! Those bastards!!! "Oh well, sorry, taxpayers and social program recipients."

Wall Street & TBTF Banks take absolute precedent. Watch how the cuts to follow in social programs and taxpayer-to-taxpayer transfer payments get marked to roughly the amount that the Treasury/Federal Reserve used to bail out Wall Street parasites.

Welcome to the non-Hollywood version of The Matrix, and be careful to not bumb your head or twist your ankle when you jump down into the cosmic bunny hole, bitchez.

Sat, 08/06/2011 - 01:22 | 1529710 Flakmeister
Flakmeister's picture

Not going to argue with your theory, after all it is only an logical interpretation. You do realize that the S&P action does not change anything, i.e. no convenants are breached. It is the next downgrade, (Fitch or Moody) that has real effect. S&P fired a warning shot, no doubt telegraphed from the the Treasury. S&P also made an effort at some semblance of intellectual honesty. albeit in a backhanded calculated manner.

Sat, 08/06/2011 - 01:30 | 1529726 Syntaxkat
Syntaxkat's picture

you have to love how a couple of years ago the anger was palpable but now the anger is quelled by trolls.  its easy to vent real anger but trully this was almost inconceivable before the trolls came.  gotta love the tactics.  vent and chill, the enemy has calmed you.

Sat, 08/06/2011 - 01:33 | 1529729 Flakmeister
Flakmeister's picture

Not sure who you are referring to as a troll in this exchange, please elaborate...

Sat, 08/06/2011 - 05:52 | 1529938 Ghordius
Ghordius's picture

"no convenants are breached. It is the next downgrade, (Fitch or Moody) that has real effect."


keep perspective - at the moment, this is only psychological - on the markets

the next downgrade has legal and technical financial consequences

Sat, 08/06/2011 - 09:28 | 1530138 WonderDawg
WonderDawg's picture

"keep perspective - at the moment, this is only psychological - on the markets"

The markets are psychologically driven. When fear and panic take over, there is little that logic will do to stem the tide.

Sat, 08/06/2011 - 07:40 | 1530009 xxxbean
xxxbean's picture

Let's see - Moodys  the same outfit that rated the CDO/CDS's at AAA.  Yeah - that's the ticket.

Sat, 08/06/2011 - 08:59 | 1530103 Sean7k
Sean7k's picture

Good morning Flak,

I have to agree. Anyone one invested in the market has read the writing on the walls. This continues to play into what I have been saying for awhile- it's all about volatility. Money is made on dramatic movements in the markets, especially when you have the inside information to maximize your returns.

The banks need money and the market remains an excellent opague transfer mechanism. Any large movements in gold and silver will be similarly traded. Volatility, volatility, volatility.

Farm Report from Western Ky: very uneven growth from the cycles of heavy rain and high temperatures. Parts of the fields are oxygen starved and not producing. Corn looks small and yields look to be low. The high heat is prematurely killing the corn and starting the dryout before it reaches maturity. Soybeans may be better, but since they were planted late, it is too early to tell.

Hope all s well in your neck of the woods.

Sat, 08/06/2011 - 10:05 | 1530216 Flakmeister
Flakmeister's picture

Top of the morning to you as well...getting back to ZH after a 2 week sojurn....

Thanks for the farm update.... I fear some of that volatility will be in the price of grains and whatnot this autumn...

Sat, 08/06/2011 - 11:31 | 1530384 DaveyJones
DaveyJones's picture

Don't worry we have specially modified foods and unlimited fertilizer and energy to fix these problems


Welcome back Flak

Sat, 08/06/2011 - 10:23 | 1530251 stant
stant's picture

yep same here in central ky one field looks great but acroos the road not

Sun, 08/07/2011 - 06:34 | 1532419 Abitdodgie
Abitdodgie's picture

Up here in North Dakota the crops are looking very wet , the yealds will be down but i am sure the USDA will spin it differntly so we can sell more corn to china that we have not got . Don't be surprised if we have food problems in the fall that is if we get passed the end of september, good luck to all 

Sat, 08/06/2011 - 03:37 | 1529798 Mentaliusanything
Mentaliusanything's picture

While I trust your comments over the years I think you (and many others) miss the main point viewed from a different perspective. I posted this a few minutes ago after my meeting with some very worried people. They feel this . It is the hard truth this is no laughing matter as it trips a few protection switches.

(copy / paste)


Not once has it been said..... anywhere .. It HAS NOT BEEN SAID ....get it.... NOT been said !!!!!!!!!

This is the Worlds Reserve Currency !!!!!!

It has been defiled, Fucked, screwed with, lost its Purity, raped, Buggered, slut fested, gang raped, cherry popped, defiled,  debased, royally screwed with, NOT to be Trusted, Not to be tied with, a Whore and a plaything of unclean people.

Oh Baby you are in so Much trouble.

Thanks to ;;


To big to fails

Helicopter wanker nankie


Lobbists (fuck I hate them)

Whats in it for me Congress

Wall st wally wankers.

and a crowd of a thousand hanger on blood sucking Tossers.

Welcome to HELL come Monday.

You are so Fucked!!!!!


Sat, 08/06/2011 - 09:43 | 1530166 snowball777
snowball777's picture

Yep, had Americans any sense whatsoever, they'd divide evenly into two groups and raze both K and Wall streets to the ground, but the destruction to come will have to suffice.

Sat, 08/06/2011 - 05:35 | 1529933 macholatte
macholatte's picture

It's all pre-arranged. and theater.

I find it hard to believe that they are that smart. However, I am convined that:

** Obama is a Marxist ideolog who really has no clue what the consequences of his actions are. A college professor and community organizer whose whole life has been spent hating the white man and the white establishment that made him wealthy. Some folks believe he is the illegitimate son of Soros. Perhaps, I will not comment on that. However, he does appear to have been cultivated for this job and has been surrounded with like minded Communists and together they feed off themselves. Their goal is the destruction of the America that has so generously provided for them. Yet they do not see the other side of the grassy knoll. The shape and form of the residue of their destructive actions is unknown. When it's over, he will be much wealthier than even the Clintons who made over $100M in the 8 years after leaving office (see Hillary's financial disclosures).

** Soros is orchestrating the fall of American Supremecy and has not a care in the world for the pain he will cause millions of innocents. That is his life's work.

** The rest of the gang is either delusional or outright criminal. It's diffcult to believe that so many highly educated people can be so stupid. So it is appropriate to deduce from their actions that their motives are other than they appear.


 Now that I look back, I realize that a life predicated on being obedient and taking orders is a very comfortable life indeed. Living in such a way reduces to a minimum one's need to think.
Adolf Eichmann

Give me four years to teach the children and the seed I have sown will never be uprooted.
Vladimir Lenin

I once said, "We will bury you," and I got into trouble with it. Of course we will not bury you with a shovel. Your own working class will bury you.
Nikita Khrushchev

It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.
Joseph Stalin

In a higher phase of communist society... only then can the narrow horizon of bourgeois right be fully left behind and society inscribe on its banners: from each according to his ability, to each according to his needs.
Karl Marx

In America, there's a failure to appreciate Europe's leading role in the world.
Barack Obama


Sat, 08/06/2011 - 05:57 | 1529940 Ghordius
Ghordius's picture

Why can't I junk this clown? His rating triangles don't work...

Sat, 08/06/2011 - 09:45 | 1530168 Chuck Walla
Chuck Walla's picture

I believe Khrushchev said:  We will BARRY you!


Soros learned his heartless, pitiless tactics from the knee of his Gestapo Masters in WWII Hungary where he helped send his fellow Jews to the camps and stole their silverware without conscious.  He has admitted to his lack of integrity and principles in public declaring: "someone else would have stolen the wealth if not him".

Sat, 08/06/2011 - 10:58 | 1530230 Flakmeister
Flakmeister's picture

Obama may be many things but a Marxist ideologue ain't one of them.... Two thumbs down, but nice work on the quotes...

Sat, 08/06/2011 - 06:51 | 1529977 Tyranny is Love
Tyranny is Love's picture

Theater, yes.

Reading the press release it sounds like it is justifying the creation of the super congress/committee.

S&P downgrades and says  the political divide and inability to compromise is responsible. Enter the super congress which is being sold as the answer. This will help with justifying tough speeding cuts while allowing the politicians the ability to blame someone else. If the people don't go for spending cut/tax increases the ratings agencies may "decide" to downgrade again.

Sat, 08/06/2011 - 10:00 | 1530199 YHC-FTSE
YHC-FTSE's picture


I posted a couple of days ago that the S&P would most likely follow Moody's and do essentially nothing but put the US on negative watch. But that has been (To me) satisfyingly proven wrong. 

I agree with the gist of your post that perhaps this was the plan all along considering the major US ratings agencies have been nothing but mouthpieces for TPTB, but wasn't this also a case of damned if they do and damned if they don't? 

More importantly, considering all the pieces that are now in place: 1)Downgrade, 2)Markets down, 3)EU "contagion" 4)Poor outlook

When will Bernanke start pumping up the markets? Have we seen the bottom, or will we see more drastic falls until even those who are the most critical of the Fed start begging for QEiii? I think the printers are running now for Monday's trading, but I have been wrong. 

Sat, 08/06/2011 - 15:31 | 1531394 TruthInSunshine
TruthInSunshine's picture

YHC and all others, I agree with much of what you said, but I think you aren't buying into my belief that this is a long term plan and script that they're following. I can't obviously prove this, but if you look at the sequence of events, and consider especially what has happened from about 1971 until today (or if you want to use a shorter chart, 2002 to 2011 works nearly as well), any rational person could literally put the jigsaw pieces together, and see this is clearly intentional.

'71 - off the gold standard. Plaza Accord. Massive takeover by MIC in the 80s (they've only grown since). NAFTA and giving MFN trade status to China in the 80s and early 90s, respectively (under Bush I and Clinton). Dismantling of the U.S. manufacturing base. Growth of the financial services and banking industries (Look at Gramm-Leach-Bliley), growth in the unregulated derivatives market, etc.

Tyranny Is Love nailed it.

He said that this is great for the (unconstitutional, arguably) Congressional Super-Committee which is going to decide how and what to carve up (if anything) in terms of spending.

Isn't this custom made for that group, just as he said? Doesn't this play right into EXACTLY that scenario?

Okay, for those who say "mmmm, maybe not...", wait and see what happens when there's another downgrade, or some more international criticism that is far more robust, and they really tank equity markets and wreak havoc in other ways.

This is all a game to keep the blood of the hosts, the taxpayers, flowing to the parasites, Wall Street and TBTF Banks.

If the deficit does actually get cut, American Taxpayers will PAY MORE and they will GET LESS (less deductions, less incentives, less everything), while The Bernank & Treasury make sure that TBTF Banks and Wall Street get all of that collected taxpayer blood.

They can't do the same old-same old TARP & TALF so soon again (if one asks why, just look the Taibi's piece in Rolling Stone, even if you don't agree with some of what he writes - the what isn't important, it's the identification of the scam that is the point; Taibi called attention to the Train Heist), so they're going to extract two pounds of flesh, in both cuts and increases, from the taxpayers, while continuing to nurse the Financial Complex on sweet nectar (made from taxpayer blood).

Make no mistake: I am first in line to kill fiat based systems, go back to any standard where currency is backed by instrinsic value, get rid of the debt completely (getting rid of the Fed Reserve will help to accomplish this), and get back to an economic system of "just in time payment" (JIT means no debt, either on the part of government or private households, so misallocation and waste of capital is far less severe, and bubbles are avoided, leading to greater price stability as true supply/demand curves dictate price).

But what we have now is true central planning, with  the Government and The Federal Reserve subsidizing banking and financial interests, who own the politicians (literally), while imposing more and more hardships, taxes, fees, regulations and confisactory schemes on Main Street, to fund this central planning.

Kill TBTF. End the Federal Reserve. Restore government to its limited and rightful role of protecting the sovereignty of the federation while defending the borders of the nation. Government serves it citizens, and should fear them, also, not the inverse, which is where things stand at this moment.

Sat, 08/06/2011 - 18:31 | 1531816 YHC-FTSE
YHC-FTSE's picture


Many thanks for taking the time for a considered reply. It was a pleasure to read Taibbi's pieces about the flow of money and corporate tax holidays.

I think I recognize your argument from the corporatist idea - A plan to narrow and concentrate power in order to implement more of the same transfer of wealth to TBTF Banks and Wall St. While I'm not familiar with JIT payment, I understand the JIT concept in industrial manufacturing and I can see how it could work applied to the economy. Very interesting.

So, more dips ahead in equities, another downgrade, and havoc to facilitate the power transfer to the Super-congress? That's possible. Whatever happens on Monday and in the weeks thereafter, it was enlightening to read your views.

Sat, 08/06/2011 - 04:28 | 1529889 Tom_333
Tom_333's picture


Sat, 08/06/2011 - 07:43 | 1530014 OliverTwist
OliverTwist's picture

Grazie al cazzo!

Sat, 08/06/2011 - 00:23 | 1529585 HoofHearted
HoofHearted's picture

How do you say, "Thank you S&P" in Italian?

Sat, 08/06/2011 - 03:54 | 1529867 Mentaliusanything
Mentaliusanything's picture

Well it was a good snark


 Grazie S& P ... cazzo sei femmine.

To save time and bandwidth .. Thank you S&P.... fuck you Bitches

When attacked by a Blood seeking Huge Big Motherfucking Bear you only have to out run your slowest opponent. 

I think there is something in that for Everybody.... Don't you????

Sat, 08/06/2011 - 04:41 | 1529902 fajensen
fajensen's picture

Wait a second, there ... *I* am that fat guy who will make the second-slowest in the party rich by posting the bear-chase video on you-tube ...

Fri, 08/05/2011 - 22:45 | 1529260 dwdollar
dwdollar's picture

Good question.  I'm sure that will be elaborated upon by the talking heads on Sunday.

Fri, 08/05/2011 - 23:01 | 1529325 midtowng
midtowng's picture

I honestly never thought I would see a rating agency downgrade America under ANY circumstances.

Maybe the guys at S&P will need to be renditioned?

Sat, 08/06/2011 - 00:41 | 1529639 boricuadigm-shift
boricuadigm-shift's picture

Expect the same Italian mafia that raided the S&P in Milan to pay a visit to the offices in Wall Street!

"I told you not to fock with us, now we have to break your face!"


Or maybe Obama hires some Cubans:

"You foookkk uith mi, yu fukk uith best!  Say hello to my little friend" 

Sat, 08/06/2011 - 02:05 | 1529773 MIDTOWN
MIDTOWN's picture

You eat, You talk for a while, you relax, you make them relax, Then you get up and you go take a leak. No - better still... You ask permission to go.


Sat, 08/06/2011 - 02:05 | 1529774 MIDTOWN
MIDTOWN's picture

You eat, You talk for a while, you relax, you make them relax, Then you get up and you go take a leak. No - better still... You ask permission to go.


Sat, 08/06/2011 - 07:43 | 1530013 duo
duo's picture


Sat, 08/06/2011 - 00:01 | 1529522 Bob Sacamano
Bob Sacamano's picture

"Why does S&P hate America?"

That perspective is one of the primary problems -- hating the federal government has nothing to do with hating America. 

Sat, 08/06/2011 - 00:24 | 1529589 I did it by Occident
I did it by Occident's picture

Yeah, I think the same thing when they talk of the president "running the country".  ummm, he runs the govt, not the country

Sat, 08/06/2011 - 09:58 | 1530200 FEDbuster
FEDbuster's picture

S & P joins China's rating agency in saying, "The Emperor has no Clothes".

Hasten the Collapse, OBAMA 2012

Sat, 08/06/2011 - 02:13 | 1529782 itchy166
itchy166's picture

Why does anybody NOT hate America?

Sat, 08/06/2011 - 10:41 | 1530272 Bob Sacamano
Bob Sacamano's picture

You're point is so well made by the flight of people out of the US.......oh, wait, the masses are trying to get in the US, not out?  Never mind.

Better question is "why does anybody NOT hate the federal government?"

Fri, 08/05/2011 - 21:40 | 1529051 wombats
wombats's picture

Nah.  The markets have all weekend to digest this news.  I wouldn't be shocked to see a rally from relief that it was such a tepid statement that accompanied the downgrade.

Fri, 08/05/2011 - 21:53 | 1529109 zorba THE GREEK
zorba THE GREEK's picture

S&P was very generous since we are at tipping point of being unable to pay back debt and instead of

reversing course Obama just yelled "FULL SPEED AHEAD"  We are on fast track path to default, so rating should be D.

Fri, 08/05/2011 - 22:15 | 1529168 Rodent Freikorps
Rodent Freikorps's picture

No kidding. If they included unfunded shit, the 30yr would be rated lower than toilet paper.

Fri, 08/05/2011 - 22:43 | 1529238 Manthong
Manthong's picture

Just remember that the clowns responsible for destroying "the full faith and credit" of the Unitied States are the investment managers of your family's future.

Consider also that they are now your health and medical care managers as well.



Sat, 08/06/2011 - 00:04 | 1529535 Worker Bee
Worker Bee's picture

If you dont think this is a big deal turn on RT news...they are calling it AAA-RMEGGEDON.LOL!

Sat, 08/06/2011 - 02:06 | 1529772 macholatte
macholatte's picture

Just remember that the clowns responsible for destroying "the full faith and credit" of the Unitied States are the investment managers of your family's future.


This is better than viagra and a $10,000 hooker to George Soros.

Sat, 08/06/2011 - 06:00 | 1529943 Ghordius
Ghordius's picture

what is this?

an automatic tweet feed?

Sat, 08/06/2011 - 09:51 | 1530183 snowball777
snowball777's picture

There are no $10k hookers....only $10k 'campaign donors'.

Sat, 08/06/2011 - 02:50 | 1529815 ciscokid
ciscokid's picture

The US is on a fast track of becoming a third world nation.

Sat, 08/06/2011 - 03:05 | 1529835 Pay Day Today
Pay Day Today's picture

Complete with a powerful oligarchic elite living in beautiful mansions, behind high walls manned with people holding submachine guns.

Sat, 08/06/2011 - 04:44 | 1529907 fajensen
fajensen's picture

Mortar fire negates high walls! Just Saying!!

Sat, 08/06/2011 - 05:49 | 1529937 Dugald
Dugald's picture

You can send some nasty stuff over the wall hanging from a modle chopper...

Just sayin......

Sat, 08/06/2011 - 09:50 | 1530178 Long-John-Silver
Long-John-Silver's picture

Or just use a National Guard Tanks to knock holes in the walls and then take the building down within.

Sat, 08/06/2011 - 00:07 | 1529539 Cursive
Cursive's picture


Joe LaVorgna or Cramer or some other bulltard dumbass will surely find a reason to buy equities through all of this. Forget the "riskless" asset that was the Long Bond, buy more Apple, Netflix and!

Sat, 08/06/2011 - 00:14 | 1529554 Worker Bee
Worker Bee's picture

You mean like this guy?

And the Qoute of the night.....

Setrakian’s point is that the market’s view on U.S. debt – the 10-year Treasury yield was at 2.57% Friday despite the concern about a downgrade – is that Uncle Sam will be able to repay the money it borrows. That repayment may come in devalued dollars, but it will come, so worry over the matter is academic.

Sat, 08/06/2011 - 00:26 | 1529600 FEDbuster
FEDbuster's picture

I wish I could post pictures, but since I can't:

Sat, 08/06/2011 - 01:28 | 1529712 Cursive
Cursive's picture

@Worker Bee


Thanks for the link.


The question Friday night is: does a country’s credit rating matter, if it controls the currency in which it repays that debt?

One of the biggest concerns about a potential downgrade was whether financial institutions would be able to continue carrying U.S. debt as risk-free assets on their balance sheet.


We've been told that the FRB is independent of the USG, so another blatant lie is being exposed:  It's the Treserve, not the Treasury and the FRB.  Honestly, the problems in Europe probably outweigh the problems in America and the Euro will be the first to die.  Thus, the USD will rally and bonds should rally alongside the USD.  But hard assets should outlast any fiat currency for the foreseeable future.  My investing thesis?  Get long stuff, not fiat.

Sat, 08/06/2011 - 05:04 | 1529917 fajensen
fajensen's picture

The USA is not that special. Even the Romans printed their way into poverty and collapse.

The Sovjet Ruble was the reserve currency inside the USSR and it's sattelites; millions died when the USSR collapsed, the Ruble lost 98% of its value and nobody wanted it because it could not be used to buy anything useful with. Vodka became the transitional currency. The USA is not that different from the USSR - Yes the debt (and pensions, and salaries) were repaid, but with worthless paper that could not be exchanged for goods or services. That glorious US military will just drag the economy down faster when the soldiers start setting up roadblocks to collect their salaries while the officers sell of all the weaponry to crazies and terrorists for good, foreign, money and become oligharks!

PS: Debtors who borrowed and invested in land, industry and political connections made out like bandits, however. With a 98% drop in the value of the borrowed currency, a small EUR loan goes a long way.

Sat, 08/06/2011 - 08:36 | 1530072 Captain Benny
Captain Benny's picture

So getting hammered on the sidewalk with a cheap bottle of Gordon's is just transitory?  I think I'd rather eat my gold... Gordon's is pretty nasty vodka.

Sat, 08/06/2011 - 10:08 | 1530220 m43cap
m43cap's picture

And not so long ago, Cable ruled the waves. The Brit. Empire has long gone and the UK is not too far behind.

Sat, 08/06/2011 - 08:32 | 1530067 EscapeKey
EscapeKey's picture

Unless, of course, Bernanke uses the opportunity to announce QE3 over the weekend, to "provide liquidity during a fund treasury allocation" or other such nonsense.

Sat, 08/06/2011 - 09:20 | 1530128 WmMcK
WmMcK's picture

Imaginary, soon to be complex.

Sat, 08/06/2011 - 10:22 | 1530245 Oboneterm
Oboneterm's picture

So right on....Like who cares what S&P says........some of the biggist blow hards on the palnet ...Charlie Gasparino get's it.....

I wonder how short the guys at S&P are?????



Fri, 08/05/2011 - 21:13 | 1528924 trav7777
trav7777's picture

if this sticks, Obama is dead.  The jackals will start circling and taking chunks with increasing boldness

Fri, 08/05/2011 - 21:23 | 1528969 anynonmous
anynonmous's picture

poor choice of words t7 SS on your doorstep in the next few hours (FYI their bots are bad with context but are attracted to key words)

notwithstanding the spin has begun "It's the TEA PARTY's fault" read the text (between the lines) of the downgrade

Fri, 08/05/2011 - 21:27 | 1529000 Calculated_Risk
Calculated_Risk's picture

Exactly. tptb have been foaming at the mouth on a way to further demonize the tea party. And don't forget typical lib thought process.. 'Obama is the victime'. So he could rape a 5 year old boy on tv and they say it was the boys fault. That obama is a victim of a troulbed upbrining etc..

Fri, 08/05/2011 - 21:43 | 1529064 mayhem_korner
mayhem_korner's picture

Barry-O was outta town at a birthday bash.  He couldn't even vote "present," so it can't be his fault.

Fri, 08/05/2011 - 22:13 | 1529159 nmewn
nmewn's picture

"Exactly. tptb have been foaming at the mouth on a way to further demonize the tea party."

No doubt.

No, it can't be the insurmountable debt racked up every year since I was born.

Its not the open bribery, earmarks, bad public policy, taxpayer subsidation of 100yr. old energy technology, eternal war, welfare plantation voting blocks, a given pass on anything Wall Street wants etc. et fucking nauseum. must be 80 freshman congressmen with a verrry bad They ain't seen nuthin yet. The rage is palpable.

"One of the penalties of not partciipating in politics is you will be governed by your inferiors"...Plato

Fri, 08/05/2011 - 23:01 | 1529324 CompassionateFascist
CompassionateFascist's picture

Just looked at the write-up at Atlantic Mag...Ponzi libs there are just stunned. By Sunday, frothing mad.

Sat, 08/06/2011 - 00:13 | 1529550 nmewn
nmewn's picture

Piss on em.

I and others are sick and tired of pointing on the abject failure of the Fabian Keynes. All this was settled in the 70's the last time his stupid theory failed. They are a menace to humanity, a boisterous cabal of statist vampires sucking the labor of the masses under the pretense of social justice.

What is being borrowed? Its not Granny's check money. That lie was exposed. Its not checks to the troops the CNC sends in to harms way. That lie was also exposed.

Its to fund this thing that resides in DC and the states, which in turn gives lawful cover to this thing on Fraud Street. There is no reason for it to be this large.

Now, apparently, for something to consume themselves with, they've gone after breakfast cereal. These are not liberals.

This is the stuff of economic and social fascists.

Sat, 08/06/2011 - 01:38 | 1529733 BigDuke6
BigDuke6's picture

No 6 green from me.

The Fabians have been the enemy within since their inception... the uk had them all throughout their civil service in the 1960's where every US technology was dutifully passed on to the kgb

Sat, 08/06/2011 - 04:20 | 1529878 Pay Day Today
Pay Day Today's picture

Complete falsehood. You are conflating the Left Wing Fabians - a progressive and forward thinking UK based organization that I highly respect - with the Free Masons/KGB scandal which broke in the 1980's. Totally different.

Sat, 08/06/2011 - 07:58 | 1530027 BigDuke6
BigDuke6's picture

Oooo u respect them do u?
How jolly, then u should look into what they get up to,
They have been in their element with a lot of influence in how the uk was progressively taken down in the last 20 to 30 years.
Micheal foot , Fabian , used to take handouts from the kgb.
Google , to baked to link
They are champagne socialists of the highest order.
If that turns you on,fine, but it makes you a fool in my mind

Sat, 08/06/2011 - 09:41 | 1530156 Calmyourself
Calmyourself's picture

When the time comes fabians will get very popular, probably be hard to find them..  Lets hope your on a list somewhere.

Sat, 08/06/2011 - 01:54 | 1529756 DoChenRollingBearing
DoChenRollingBearing's picture

No. 9 was from me.

Keynesian economics, like Communism, has been shown to be a complete failure.  Putting us not only at risk of poverty, but of dictatorship as well.

Sat, 08/06/2011 - 03:01 | 1529832 zhandax
zhandax's picture

if this sticks, Obama is dead.

Bingo!  It doesn't look like the real overlords are particularly happy that obummer couldn't disguise the latest ponzi escalation any better than he did and he left the other side locked and loaded to ask for some actual cuts.  This is his pink slip.

Sat, 08/06/2011 - 03:10 | 1529840 zhandax
zhandax's picture

if this sticks, Obama is dead.

Bingo!  It doesn't look like the real overlords are particularly happy that obummer couldn't disguise the latest ponzi escalation any better than he did and he sidestepped the tea party rather than completely discredit them.  This is his pink slip.

Sat, 08/06/2011 - 03:12 | 1529842 zhandax
zhandax's picture


Sat, 08/06/2011 - 04:26 | 1529844 Pay Day Today
Pay Day Today's picture

The US doesn't even know how to do Keynesian economics any more. You blame it on Keynes why?

When was the last gubbmint who looked at a major recession and said - time for us to employ 5 million people directly WPA style and pump some real money into real peoples pockets and into the real economy? When did Keynes ever say, let the wealthy 0.1% and the most profitable corporates pay less and less tax, and borrow the difference from China?

Spending for Iraq, Afghanistan and Halliburton does NOT count as Keynesian stimulus. Neither does lending $16T to foreign and domestic banks as bail out nor offshoring highly skilled US jobs to Shenzhen.

Last I looked the US allocated capital, changed the rules, borrowed and spent in such a way that the top 1% of the population collects 23% of the country's income, the big banks can borrow money at 0% while the average Joe is lucky to get it at less than 10%. That is NOT Keynesian.

Don't blame Keynes for this hole the US is in today. Compare the US with Japan. Japan knows how to do Keynes. Better learn the lessons quick.

Sat, 08/06/2011 - 09:38 | 1530147 Coke and Hookers
Coke and Hookers's picture

True but you're missing the point. In a country that has been deindustrialized and imports most of the stuff people would use a stimulus to buy, the stimulus would primarily increase account deficit, not boost the economy. That would just plunge the US further down the drain, albeit perhaps not as fast as handing all the money over to banks. Keynesian methods do not work in an economy where the boosted consumption does not boost domestic production. Period.

Sat, 08/06/2011 - 10:01 | 1530208 Tortfeasor
Tortfeasor's picture

"Compare the US with Japan.  Japan knows how to do Keynes."

And with that, the last pitiful shred of your credibility is gone.  You should have started with that gem, saving me the time I wasted reading the rest of your post.

Sat, 08/06/2011 - 10:34 | 1530261 SWCroaker
SWCroaker's picture

Don't overlook the error of government involvement; ANY government involvement.  As a system it lacks motivation to save up during boom times, thus allowing real compensation during busts.  Instead, they ramp up spending during boom times, and when bust comes, they steal on a massive scale from the citizenry by materializing money.  

That is wrong wrong wrong, and the entire concept behind it is one that government not only can, but must step up when the business cycle turns.

Keynes whispers into ruler's ears, "You have the power to fix this", while any good Austrian would simply say "Let things be".

Sat, 08/06/2011 - 11:10 | 1530344 nmewn
nmewn's picture

"You blame it on Keynes why?"

I will assume you're serious.

I blame Keynes and the statists who latched onto his flawed general theory to promote themselves above everything/everyone else. His theory allowed them a avenue and they seized on it. One would think the argument of giving government supernatural powers had already been disproven. My belief is, government should never be allowed a surplus. It should only be taking from the economy what it needs to fulfill its primary function.

Now, your idea of its "primary function" is probably very different than mine. To which I will simply ask...

Under his theory, at what point is the government debt incurred ever paid back? This is the question that Keynesians need to answer.

It (he) acts as though the people themselves are subservient to government demand instead of the other way around. Which leads me to his foreward in the German edition of his GT which answers your WPA entreaty...

"The theory of aggregated production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire."

Simply stated, I do not labor for government, I labor for myself. If government decides what my labor is worth and it is at variance with what I decide its worth where (in a free society) do I go for arbitration?

And as government has shown, it cannot be trusted with a surplus of funds. And I will not entertain idiotic statist notions of GDP as a measure of social prosperity when the one who came up with the formula said explicitly to not use it in that manner...Kuznets.

We have followed Keynesian & neo-Keynesian theory of can kicking straight to the cliff edge and Keynesians desire more of what got us here. There is a term for this...collective insanity.

Sat, 08/06/2011 - 14:15 | 1531188 citta vritti
citta vritti's picture

@Pay Day Today: "Compare the US with Japan. Japan knows how to do Keynes."

And that’s worked out how for them? 20+ years of basically zip. Failed almost forever to recognize bad debts because it would bring down the banking system. Public spending on the government’s credit cards to the extent acknowledged debt is 200% GDP. And then caught in a neat generational, geriatric trap they’re still trying to exit. And Richard Koo says their problem was they didn’t spend enough. Hah! For Keynesians, it’s always, they didn’t do what I wanted, they didn’t do enough. Fuck ‘em. 

Sat, 08/06/2011 - 11:11 | 1529955 falak pema
falak pema's picture

So has its successor, the supply side ponzi called 'Reaganomics' that established the current private sector kleptocracy in its Oligarchic hegemony world wide. Politics is a question of checks and balances, honestly, sincerely applied to service the people in a democratic republic. There are no 'absolute' models of governance that work all the time, as human nature is its own worst enemy. The entropy effect in civilization makes sure that what worked yesterday will not work tomorrow, precisely because slothful human nature, takes its eases and the future for granted. This requires course changing recurrently, its our collective history, as human expectations having been corrupted need remedial action. Its called, in economic terms, the business cycle; it has its evident political mirror projection when expansionist liberalism is replaced by cold hard eyed conservatism to reset the course. Nothing new there under the sun.

Today, the USA has compounded its hubris of the great society plus the Vietnam war days, when state interventionism inherited from WW2 (FDR) reigned supreme in US politics, into the criminal spiral of the Zirp Fire economy. Installed by RR to clamp down on statist shills, through deregulation, by making the rich, WS et al, the new masters of the world. Without destroying its own ongoing geopolitical aim of ending the cold war successfully, which it did. This new paradigm then worked so well in the post industrial, silicon valley led new economy, that now its projection into the globalized economy based on debt and outsourcing has killed the golden egg in the home economies (USA/EU/JAP). The west has now fallen into its own elitist honey trap, by massively socialising debt and privatising profit in criminal and outrageous fashion since the 2007 signals of imminent financial collapse (subrprimes bubble after earlier dot-com bubble). 

So your simplism is a wee too thin and your prejudiced views not historical from a geo political perspective worth retaining. The USA is getting its own bad medecine and those who complain now never did so in the halcyon days when this MIND SET became laid in concrete. It was evil then given the evident slant and it is now chickens coming home to mega roost. 

Civil war may be a solution as some seem to think. But you better know whats what or it'll just end up with more pain for no result. The people of the USA should have other more cogent and less dangerous solutions, unless you think like CD argues  (I don't know if this is truly his intimate view but it is an interesting line of thought), that the whole US nation is now hooked on debt dependency like on drugs. In which case self correction of broken system by peaceful civic action will be a problem for this generation.

BTW : I totally endorse the view, expressed by the post above mine, that the true Keynsian economics model as applied in the thirties in exceptional conditions of pre-WW2 resulting from 1929 collapse, is totally misused by right wing hardliners today. 

Sun, 08/07/2011 - 06:52 | 1532432 Escapeclaws
Escapeclaws's picture

You're absolutely right about the genial Mr. Reagon.

Fri, 08/05/2011 - 23:46 | 1529485 DaveyJones
DaveyJones's picture

well said

Sat, 08/06/2011 - 00:23 | 1529586 nmewn
nmewn's picture

Damned straight Davey...a little honesty, a little friggin humility, a tad of contrition for completely fuckin up our world would be in order here with normal people.

But we ain't dealing with normal people here.

I'm all for letting it burn and lets see how they fare...because I have zero doubt we will be fine. 

Sat, 08/06/2011 - 00:45 | 1529645 Dave
Dave's picture

I totally agree...

Sat, 08/06/2011 - 01:25 | 1529718 DaveyJones
DaveyJones's picture

We aint dealin with normal folk, we dealin with criminals. And there's only one way to handle their type

Sat, 08/06/2011 - 02:42 | 1529807 Bolweevil
Bolweevil's picture

Thought something similar today. "If things get really bad..." many residents of the U.S. Love so low a little Depression won't even show up on the radar. The Haves who lose will hurt the most. Let it rain.

Sat, 08/06/2011 - 03:05 | 1529836 TBT or not TBT
TBT or not TBT's picture

If my doubt was zero I'd be unconcerned. I am concerned, however.

Fri, 08/05/2011 - 23:57 | 1529509 Rodent Freikorps
Rodent Freikorps's picture

We are all terrorists now. I'm thinking Eschelon must be losing its fucking mind now that all Tea Partiers have adopted the rhetoric of terror.

Imagine how useless their eavesdropping will be when fifty percent of the population includes at least one of the forbidden words in every post and/or email.

That is a big fuck you to the police state.

SIGINT this, bitches.

Sat, 08/06/2011 - 00:41 | 1529636 nmewn
nmewn's picture

"I'm thinking Eschelon must be losing its fucking mind now that all Tea Partiers have adopted the rhetoric of terror."

When control is what is desired it must be a bitch on their psyche when they lose control of it.

The TSA...give me a break.

Everyone boarding a plane is a criminal?...really? What the hell does that wind up meaning? That I pay for their abuse of me and I'm supposed to appreciate and maybe even like it? The friggin government walks guns across the border to the Zeta drug cartel and I have to apply for a permit to walk off my property with one? How does that work out logically?

Yeah...a big ass fuck you to a police state and all its false security trappings...Lil Sis needs to pencil me in her book as one of those dangerous, freedom loving, leave me the hell alone type non-conformists. I'm with ya.

SIGINT this, bitch.

Sat, 08/06/2011 - 02:00 | 1529764 DoChenRollingBearing
DoChenRollingBearing's picture

"SIGINT this, bitch."

+ $1660 nmewn and rodent.

80,000,000 of us are armed.  They want to grab our gold and guns?  That will STOP real fast when 20 - 50 Fascist Thugs are shot DEAD by those of us who will NOT give up these vital pieces of our liberty.

GREAT point nmewn re stupid .gov arming the Zetas...  Maybe the House of Reps can hold a hearing?  Impeach Holder?

Sat, 08/06/2011 - 11:21 | 1530371 InconvenientCou...
InconvenientCounterParty's picture

Do you think Ron Paul calling for strategic default as part of his primary campaign might have had anything to do with it?It got rave reviews on this site, that's for sure.

ZH is full of birthers, truthers etc. Now they are rushing to join the latest redneck country club "the defaulters". What could go wrong?

Sat, 08/06/2011 - 12:24 | 1530627 Jena
Jena's picture

You should see Krugman's blog.  He splits the blame between the "right wing anti-tax extremists" and S & P, who "can't get the math right" and "is in no position to be trusted".  This is an example:

"Yet US solvency depends hardly at all on what happens in the near or even medium term: an extra trillion in debt adds only a fraction of a percent of GDP to future interest costs, so a couple of trillion more or less barely signifies in the long term."

But especially painful to read are the comments from people who parrot Krugman's philosophy that more spending is good, less spending bad.  Obama is always right (except for when he caves to the GOP, Republicans are always wrong).  That they don't see both parties as screwing them is a hoot.

To paraphrase Everett Dirkson, " A trillion here, a trillion there, pretty soon you're talking about real money."

FWIW, glad I found this site when I did.  Lurking here made the last few months a lot less scary than they otherwise would have been and I thank you all.


Fri, 08/05/2011 - 22:48 | 1529262 SurferNate
SurferNate's picture

SS = military "jobs plan"

Fri, 08/05/2011 - 22:46 | 1529255 Taint Boil
Taint Boil's picture

Notice the reference to nature? [Trav7777] Apply nature (laws of physics, scientific observation, etc, etc) to everything and everything starts to fall into place. Step back .. way back, and look at it from a distance. Watch Darwinism as it starts to cull the herd. They will be laughing at us 100 years from now.

Fri, 08/05/2011 - 23:21 | 1529408 Yen Cross
Yen Cross's picture

  smart people are forgiving...  Nice post.

Sat, 08/06/2011 - 00:08 | 1529529 Milton Waddams
Milton Waddams's picture

This is a huge boom for Chris Rock; it's going to provide him a lifetime's worth of material.

'Bunch'a old white folk run the country into the ground and then spend money out their ass to get a nigger elected as president of the yooooooooonited states... so they can blame it all on the black guy'

And set your politics and racism aside for a minute... Rock's shtick is funny (because-- most of it -- is true).

Sat, 08/06/2011 - 00:32 | 1529616 FEDbuster
FEDbuster's picture

Hasten the Collapse, OBAMA 2012

Sat, 08/06/2011 - 10:30 | 1530256 trav7777
trav7777's picture

fuck Chris Rock.  Wake me when his demographic is able to something other than destroy everything they come into contact with.

FNM/FRE?  half black.  USPS?  Ditto.  Fed Gov?  365black and hiring and promoting like crazy for the "right" kind of diversity.

Look at NYC..98% of shootings by blacks and hispanics.  Atlanta and Philly schools? Massive cheating scandals.  Minnesota state fair in Milwaukee?  A black mob breaks out, witnesses all said they just started going after white people, pulling them off motorcycles and out of cars and beating them.  This just happened and is one of haf a dozen recent incidents matching the same profile.  There's a white guy who was in the ICU because he was beaten so badly by a group of blacks...where is the national attention?  Where is Sharpton?  Where is Chris Rock calling for healing?

So, really, fuck Rock and his stilted and self-deceptive comedy schtick.  Nobody is adding up the severe carrying cost of his demographic.  Nobody wants the "hate facts."  NOW in retrospect it was RAYCISS to have lent to the people that CRA and anti-redlining said it was RAYCISS NOT to lend to.

The USA is in terminal social decline...this type of crminal malfeasance, corruption, and fraud didn't used to be our stock in trade.  But I'm sure this is nothing that the new half black Spiderman from Marvel won't solve.

All these behaviors that you guys champion a return to are not some shared cultural norm, and you need to wake up to that fact.

Sat, 08/06/2011 - 11:39 | 1530433 KowPie
KowPie's picture

Spot on bullseye to dead center. Inconvenient facts that none of the politically correct pussies want to air to the light of day. Fuck political correctness. How about reality based on fact instead of twisted bullshit for a change?

Sat, 08/06/2011 - 15:06 | 1530870 Libertarians fo...
Libertarians for Prosperity's picture


It appears your brief stay in the Norwegian prison system is affecting your cognition already.  I've also noticed you never post a link to support your claims.  Why? Because your statistics are TOTAL FUCKING BULLSHIT!  

Trying to blame the failure of various branches of our government on demographics is utter bullshit. Total federal civilian government employees is ~17% black, and only ~32% minority - it's virtually all WHITE. So if you're dumb enough to take this bullshit approach, you need to blame white males for the failure of our government, not the ~17% slice.

Blaming blacks for the decline of the USPS is idiotic.  It's not the fault of the black mail carrier that everyone uses email and pays their bills online.  Nor is it the fault of blacks that oil prices (a huge expense for the USPS) has skyrocketed over the past decade. Furthermore, the USPS is NOT 50% black. You're just making shit up.

Freddie and Fannie?  You think their decline is due to the $10/hour data entry clerks and support staff?  What about the white, Harvard bankers who securitized shit loans and the Congressmen who mandated that everyone deserves a piece of the "American Dream?" What about the low-interest teaser loans crafted by sneaky mortgage brokers and endorsed by Greenspan?  So many people played a role in the decline of FRE, yet all you do is focus on the black $10/hour clerks and support staff - ridiculous!      

With oil, energy and money, you've got your shit nailed.  When it comes to race and bigotry, you're just another KKK idiot who MAKES UP statistics to support your white trash, trailer park mentality.  

The following was published in 2007.  If you can find a current report which shows any meaningful difference, post it.  Otherwise, STFU!

Page 11:




Fri, 08/05/2011 - 21:30 | 1529003 km4
km4's picture

David Stockman: I think the Fed is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."

Fri, 08/05/2011 - 21:41 | 1529056 yabyum
yabyum's picture

too late for narcan.

Sat, 08/06/2011 - 00:01 | 1529521 Cursive
Cursive's picture


Nice reference to David Stockman. Somewhere he is laughing and Gerald Celente has a wry smile on his face.

Sat, 08/06/2011 - 00:22 | 1529581 Milton Waddams
Milton Waddams's picture

Media whore and "banking analyst" Dick Bove finally got one right.  Last week Bove did the financial channel circuit talking up big time doom and gloom.  I caught him on GE/MSFT/CMSKA's propaganda arm and he, without mincing words, said cash is the only position to be in.  When asked what he was doing with his own money- he said he went to cash.  He also raised a legitimate point-  if the US' debt is no longer considered a safe haven people need to determine what the new safe haven will be (note: metals were not mentioned). 

Pretty obvious that Bove was an insider in this episode (perhaps payback for his previous ruses?)

Fri, 08/05/2011 - 21:38 | 1529041 toady
toady's picture

Moodys & Fitch will jump on board on Monday.

Its all down hill from there...

Fri, 08/05/2011 - 22:13 | 1529163 Pontificating B...
Pontificating Buffoon's picture

Yeah, because neither had the cojones to do it first themselves...pussies.

Fri, 08/05/2011 - 22:44 | 1529244 toady
toady's picture

Nobody leads anymore.

They just slump along like a bunch of moody teenagers.

Thats why stuff like this downgrade is soooo shocking.

Nobody could have seen this coming!

Fri, 08/05/2011 - 23:01 | 1529316 zorba THE GREEK
zorba THE GREEK's picture

Moody's and Fitch will be cowering in the corner hoping retribution doesn't spill over to them.

Sat, 08/06/2011 - 11:39 | 1530431 Smiley
Smiley's picture

"Excuse me sir, but there are 6 helicopters above the roof with men sliding down ropes; shall I cancel your 11 o-clock meeting?"

Fri, 08/05/2011 - 23:02 | 1529320 Founders Keeper
Founders Keeper's picture

[Thats why stuff like this downgrade is soooo shocking.  Nobody could have seen this coming!]---toady

I did NOT see this coming for 6-12 months.  (Serious.  No sarcasm here.)

I admit it.  I was absolutely wrong.

Were there political reasons for the downgrade?  Probably.  But, you know what, I had already considered that possibility in my 6-12 time horizon.  So, I leave it at that:  I was wrong.


Fri, 08/05/2011 - 23:29 | 1529436 DoChenRollingBearing
DoChenRollingBearing's picture

It surprised me too this soon.

Sat, 08/06/2011 - 09:55 | 1530189 Founders Keeper
Founders Keeper's picture

It's a strange new world.

Thursday evening I spoke with my wife about the 513pt drop on the Dow.  I expressed worry.  I told her that I only had enough information to account for a 200, maybe 300pt, drop on the Dow.  It worried me that I didn't yet have enough info to account for the a 500pt drop.  Info blackout.  I'm usually ahead of the curve (thanks in good part to ZH).  Now I felt behind the curve.  And, if I(we) don't know what's going on, something big is happening.

I heard the S&P downgrade on the radio driving home.  When I got home, I called my wife.  "Honey, I think I just found out why the Dow lost 500pts."

God Bless, Do Chen.  Thanks for your Reply.  Nice to know I'm not alone out here.



Fri, 08/05/2011 - 23:31 | 1529442 agrotera
agrotera's picture

Hello Founders Keeper. Seriously, you, like all of us, only saw this out in the future because of cognitive dissonance (not our resident ZH'er CD).  When Paulson said he "couldn't " do anything to save Lehman, although he denied Lehman a 6 BIllion bridge loan, then two days later GAVE AIG 85BILLION to pass out the back door to his buddies to pay off the "let Lehman die" credit default debt, then he spent THREE weeks lobbying for TARP instead of being HONEST with the country and asking Congress for a facuility to unwind bankrupt toobigtofail banks, and use a temporary treasury faciluty to keep lending flowing.  Also, to "tide" over Morgan and Goldman, Paulson gave them bank holding status although he stalled on Lehman's request, and thus never helped Lehman. With all the puts, shorts, credit default swaps paid by treasury, the Lehman death was a live carcus for bankrupt entities to keep them going for the weeks that it took for Paulson to "convince" the country that he was "our" fiducicary, and that he had all of "our" best interest at heart, no self dealing there.  We have had three years and counting of free money going from the treasury to the Federal Reserve, then to the agents of the privately owned Federal Reserve, the toosacrosanct to fail banks, so they could gamble and run up the market to make it look like everything was "OK" while our country is looted by the likes of Bank of America and their hedge funds (  )buying up tax notes and gutting the country with the "free" money that they got from treasury, thanks to the fact that the privately owned Federal Reserve Corp actually makes all policy, gets each of our elected officials elected (except for maybe the teaparty candidates) and now, we have to pay for the fact that we have been robbed blind. And to top the whole fraud off, the Fed decided to pay themselves a 0.25% bonus on the triple size reserves they are holding since the crisis to compensate them for all their trouble.

I hope Democrats and Republicans will find their way to TeaParty mantras and together we can save our country from the criminals that have taken us over.

Sat, 08/06/2011 - 02:39 | 1529804 Escapeclaws
Escapeclaws's picture

The most dangerous people are very smart sociopaths.

Do NOT follow this link or you will be banned from the site!