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S&P Downgrades US To AA+, Outlook Negative - Full Text
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'.
Rationale
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.
Outlook
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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Hmmm...so now we'll get those long-awaited rising interest rates, continuing high unemployment, lower equity prices, the ECB trying to out-print the Fed, 45 million on food stamps, 50% of the country pays no taxes, flash-mob racial wilding and 100% debt/GDP - growing at 10% or so per year.
Things couldn't possibly get any worse, right?
BTFD!
Will we really get higher interest rates on AA?
Well, holy man Rev. Jesse J. says the republican action on the budget was a declaration of civil war, so we shall see.
http://dailycaller.com/2011/04/07/jesse-jackson-declares-federal-budget-...
So much shit around and all the economists talk about is the markets.What about the social shit,if the Eurozone has to integrate any further it becomes one big Germany,what happens when a nation disagree,s with what Germany wants you are looking at Civil War in the Eurozone the Austerity will just be to much.I am sure Europe would swop for a Credit rating agency downgrade.However what happened tonight with the downgrade is history it is the end of the Dollar as the worlds reserve currency,the state the worlds in this is either going to end in war or a war of attrition between the US,the Eu and China to see who will be the one left standing.Confidence is truly gone,anything is possible,so glad I have been stacking the fallout from all this is going to be explosive starting Monday AM with loads of funky shit going down in the city.
Jesus the drama here is getting out of control. Relax sparky and learn how to punctuate a sentence while you are at it. This downgrade means little to nothing imo since the guys who make the rules can just rewrite the rule book. They have been juggling these ponzi balls for 3+ years now and you think something like this by a dipshit ratings agency that nobody believes or has faith in anyway is what brings the whole thing down? Puhleeze. Pop another xanax and chill the F out.
oh hey, i'm here for the gang bang.
also, what's the original story behind 'bitchez'?
It was Chumba.
Most likly. Or Cheeky Bastard.
It was definitely Chumbawamba. Started off as "Gold, bitches!" back in late 2009.
Fair enough.
Well, some of em' like gangbangs. But the marrying kind like shiny stuff.
But, In my personal point of view, get an ugly one to marry you...
.
Ican, welcome to ZH.
Newbee gang bang, Bitchezz!! --Been here a year, and was before my time but I think it started out something like that!
Or maybe just started as a ZH chest-bump over things like the momentum of gold and silver prices, which is ongoing.
Tyler Durden is fantastic and ZH can make your sideburns grow synapsis. Sideburns, Bitchez!
Tyler Durden's Mom has a tatoo on her arm
that reads SON
+ ? the world's most interesting man !
Ican,
I was at the gator bowl on new year's...where were you? i can tell you i wasn't wearing the maize and blue.
that was a very nasty breed of beating you boys took down there...didn't y'all used to play football -- dad says you did, back in the day.
SOUTH EASTERN CONFERENCE, BITCHEZ!!!
oh, snap, two-a-days have begun...time to seperate the wheat from the chaff. i dropped by yesterday afternoon to show my son the sort of shitty-hell he'll be all too eager to soon join -- just wanted him to see the sweaty, steamy underbelly of the game. it's so goddam brutal. you stand and observe young boys smacked up against the first true test of their manhood as they hustle along the boundry of heatstoke-delirium and wide-eyed whistle-directed intensity. have i mentioned lately that it's hot outside?
Baseball: America's Game.
Football: Dixie's Game.
Prima facie, bitchez! face it...give up now or get all nice and comfortable with shame and soggy-stale nostalgia; by which i mean, you don't need no more gang bangin, bitchez!
No offense by all that, ican, The Big Chill is one of janus's favs; it's just drippin with soggy-stale nostagia.
don't go round tonight/
it's bound to take your life/
there's a bad moon on the rise,
Well, I stand corrected - I said they'd fold yet again. This time they didn't.
Sure, this should have been the 2nd, 3rd or 4th downgrade, but at least they did something eventually.
It was, as you say, eventual.
Not trying to sound cavalier, mind you. Cause this shit is REAL. But it was bound to happen, sooner rather than later.
Monday mayhem. Coming down the tracks like a freight train! You thought Thursday was a selloff? Stand the fuck by.
This is bizarro America. This downgrade could be bullish.
Algos to maximum.
"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"
Isn't that what one of the primary dealers mouthpieces wrote they wanted to see from operation twist anyway? I believe it was posted here yesterday.
Sure, right. Monday before the open Ben the bearded clam will lower fed funds target to 0%. Maybe -.25%
Bank of New York already charging 13bps for deposits, so it wouldn't surprise me if the Fed MANDATES charges on EVERY depositors cash...read it and weep....we live in Gotham city and the Federakreservebanksters run the place.
operation twist is to sell short term and buy long term. isn't 10 years long term?
Holy fucking shit
I know, my rum-soaked brain is having trouble downloading this. I think I will have to re-evaluate in the A.M.
Rates are gonna rise. Gold and silver gonna plunge?
Yup. Exactly what Bob Prechter predicted.
Amazing how we crucify our prophets isn't it.
rotfl...don't start cashing those checks yet.
last time interest rates went apeshit, so did gold...upward. This is sovereign default risk, here, bitchez
agreed. shits going to be crazy next week...but no way this is bad for gold or silver...traaaadition!
on the other hand...no! there is no other hand!
I hope so, silver's treated like a dirty whore and it just ain't right.
When interest rats rise, money flows away from bonds, because it there is uncertenty in the bond market. Money is not running into dollars; look at the last few weeks- the market tanked and the dollar barely moved. So where does money go? Bueller? Bueller?
Look at what happened in the '80s- rates rose behind the price of gold. Gold leads markets, it is not the other way around.
Jesus fucking Christ. I got minused for quoting Prechter?!? Man, can you say familiarity bias or what.
You are being deflated.
Yeah. That's funny. I guess you feel pretty full of yourself, don't you. Let me tell you something.
YOU ARE TAGGED
Whoop-de-fucking-do. Welcome to fight club bitch.
i think the man's trying to say you're tagged...sounds like it may be a bad thing, at some point, and to some degree, somewhere way, way off in the soon to possibly come. so, fuu, bettah watch yo' self; maybe -- or even probably!
His name is Francis Lightenup.
His name is Francis Lightenup.
his name is Francis Lightenup.
His name is Francis Lightenup.
Yeah. That's funny. I guess you feel pretty full of yourself, don't you. Let me tell you something.
YOU ARE TAGGED
i'm so full of myself i'm about to explode all over ZH...whatcha gonna do about it.
just lockin in your comment, bitch
Yeah. That's funny. I guess you feel pretty full of yourself, don't you. Let me tell you something.
YOU ARE TAGGED
you were given plenty of time to edit...this will be a lesson to you
Yeah. That's funny. I guess you feel pretty full of yourself, don't you. Let me tell you something.
YOU ARE TAGGED
there's nothing funny here; now you're it, bitch.
wait, i just got something from my muse...what's that?
and solomon said there's nothing new under the blazing hot sun...well, i declare, iNull -- i've got something new just for you -- you're not quite a twit and not so much a nincompoop, but doubtless floating somewhere in between:
A TWITCOMPOOP.
Change your username immediately, and i'll have an avatar chosen for you later, too.
You're welcome, bitchez.
Why are you getting NEGS re Prechter? Perhaps because he's made an ASS out of himself shitting on gold and silver since the inception of their moves. How can you respect someone who has been wrong for over $1,300 to the upside in gold and $33 in silver?
Probably rise due to the inevitability of QE 3 through infinity.
S&P leaves no room for any more. QE3 = status D? Or at least further down from AA+.
Gold and Silver plunge? Bernank is that you? Gold IS MONEY.
I just read that Ben has hinted that instead of more QE, the Fed may just guarantee arficial rates at zero until at least 2013... which is still Bullish. Like I've heard before, there is NO scenario, under which Gold and Silver do not explode in the near future.
.
Yes! .... we still have no bananas!
How do you say "Who's your daddy now" in Mandarin?
Chevron, or Xerox. You pick
Xevrox
Xianzai ni baba shi shei?
Or something like that. It's been a while.
Wow..and that is exactly why the market has been crashing. Somebody was well aware of this in advance. Combine this with the EUR troubles and it is affirmatively on like Donkey Kong.
The whole thing is a farce. The debt can never be paid down. Even the most draconian cuts would not be capable of touching the principal of that debt. So in fact, any cuts in SS and Medicare amount to deflecting money that would have been paid to the recipients of those programs into the hands of those who get their income from interest--the top 0.1%. As I've been trying to point out over time, there was no way that the top 0.1% would not become the ultimate beneficiaries of the money that was allocated to SS and Medicare, however indirectly. You just can't have a big fat tank of juice like that lying around in plane sight of the Lord Humungous, the Ayatollah of Rock and Rolla! So bully for S & P for promoting the lie that reducing these programs would be fiscally responsible. This is what is known as "truth telling" in the USSA. It's only "truth" if the most defenseless are put in harm's way.
That is funny but unfortunately very true.
So this should be good for a what, 100-point SPX rally? Since ours is a market not of stocks but of carefully managed perceptions and there is a weekend ahead of us… The debt can be exchanged at any time for perpetual, zero-coupon notes, as long as there is ink and paper at the Fed. The consequences, however may not be pleasant.
BTW, anybody home at Moody's and Fitch's?
Obviously all this downgrade shit has already been priced into the market thats why a big MCbreakfast on Monday morning will cost you $5,000 and all your small change will be on a one way trip to the Scrapyard.
And what do you get for $5,000? Anal leakage from the cottonseed oil in the food.
Well... I suppose that was partly what Thursday was all about. At least S&P has at a shred of integrity left.
all i care , is this good for silver ?
This is just another step in the designed collapse of the dollar, so for silver priced in fiat dollars, yes. This does not mean silver is more valuable.
Short term- You will know at 5:05pm EDT on Sunday the 7th.
Long term- hell yes.
It's possible silver and gold will trade down early due to margin requirements, but reach new highs as the new reality gets digested. I have physical so I'll be sitting on the sidelines unless silver drops to the low 30's in which case I'll BTFD.
Define good.
Price doesn't matter. Buy physical, what you can while you still can.
So what does this do to the dollar as global reserve currency, hmmmm?
Timmah says, "No effect. No effect at all. None."
Timmah Green Shoots! Or was it the other GS?
I think it was the muppet (Kneale) on CNBC that started the whole "green shoots" thing.
huh, and all this time i thought 'green shoots' was a reference to the fed projectile vomiting green volcanos of Mammon...goes to show. i don't know, DozenDirty-birds, i may be onto something -- after all, it's clogged the skys over the whole world such that nothing can fly; its ash is darkening the sun and threatening a new ice age; and everything built atop it's about to get blown to kingdom-come (probably the bad one).
so this kneale, or whoever he claims to be, is just trying to throw you off the trail...it's definitely volcano related
Weinmar's it.
timmah says "china likes it"
Got my 100Trillion Zimbabwe note in the mail today from ebay. I gotta tell you, I feel MUCH richer now, being a Trillionaire and all.
What is the BIG number after Trillion? Gazillion? If it is still up for a vote I am voting for Bernanke.!
10Bernankis. Kind of like Banzai's Banannas.
Got mine the other day too! Mine was only worth 50 Trillion, i'm a pauper compared to you.
Quadrillion, Quintillion, Sextillion, Septillion, Octillion, Nonillian, Decillion.... So many more zeroes availible, but zero still means "nothing."
Obama's Administration has been acting like Billy Ray Valentine in "Trading Places".
As the market tanked, he partied with hip-hop stars.
"Who put the Kool's out on my rug? Who put the Kool's out on my rug? This shit is Persian!" he says to Beyonce...
Fucking joke.
.
Looking good there, Billy Ray!
Feeling good!!
FED-ECB - double treat
http://www.flickr.com/photos/louis_z_bickett_ii/3951074080/in/photostream/
It's on like Donkey Kong...
Guess velocity is about to pick up. Unfortunately for the IRS/Treasury, the capital losses won't help.
...what do they call themselves again? oh yes, STANDARD and POOR...how ironic...i think kudlow better get the twits prioritized or he may have been sending a secret code red alert to those in the know...maybe italian banks were encrypted and it actually was u.s. banks...anyways, it was nice while it lasted...last one with freedom turn out the lights on your way to the dark dundgeon of dollar death...and to all those, like myself, that saw alll of this coming, warned others, prepared, and positioned, let me say what an honor it has been to be in such (.9999 fine) company.
i think i'll BBQ some hamburgers and hot dogs this weekend, devour a freashly made apple pie, crack open a samuel adams and play a good 'ol fashion tune:
"...bye-bye miss american pie..."
"Who are these guys? They're not SPECIAL. They're not RICH."
--Jon Stewart last week
Jon Stewart should be ashamed. He's pumping as much disinformation as any of the MSM shills. Can't watch him anymore, he's full of shit.
I can't stand him or that putz Stephen Colbert. That man's life is a lie... a bit like Tom Green. But at least he know's he's a joke, and is therefore funny.
mmmm....american pie....
"last one with freedom turn out the lights on your way to the dark dundgeon of dollar death"
Isn't that some sort of oxymoron? I'd think that being free of fiat would mean FREEDOM...
8/4/2011 3:00 pm Sell gold. Sell silver. More margin calls. More shorting. Buy oversold dollar.
8/5/2011 8:00 pm Buy gold. Buy silver. Screw margin calls. Screw shorts. Dollar going lower.
I hear you. Talk about getting whipsawed.
It does make me wonder what dirty trick they'll pull out to keep gold and silver in check though. You know they'll throw something out there on Monday to smack down the metals and keep everyone wondering what to do next.
I think I'll head to the mountains camping with my family...and take my physical silver, guns, my solar-powered shortwave radio and plenty of extra food. I hope the silver miner shares I've bought in my IRA account are worth more than sub-penny upon my return. But by then, they may have already confiscated all of the IRA accoutns anyway (joking...nervously). But who knows anymore?
What will this do to the price of peas?
Great avatar!!! Yen I'll settle for Peanuts and Corn after this week?
Price does not matter so long as we have hope and skin in the game. Let them eat peas.
This doesnt work well for all of those insolvent pensions does it? Whitney is going to be right before the year is over yet about those states and muni's...
After the Italian government raided the offices of the rating agencies and seized their files this week...things are going sideways in a hurry
I suppose S&P will be getting a visit from the men in the black SUVs first thing Moday morning.
They will already be there tonight.
In the 80s they used to use shredders. I gues nowadays, they use magnets.
They were there LAST night. It's a global takedown, isn't it?
Whats gonna happen here? Dollar get crushed monday and gold and silver shoot up? Or is it the other way around. I just cant see a flight to safety to the US Dollar after this. Any thoughts?
All about interest rates and bonds. Do mutual funds and pension funds have to sell T-bills now that they're not AAA? Many fund rules forbid such crap holdings. Will big insurance companies shift their massive investments? They are the ones not talking about haircuts and cowering in fear while we all focus on the banks. Health and life insurance firms are the unseen land mine IMHO.
Bluntly, do Treasuries hold their safe haven value in the face of a potential massive auto-dump? Where would the money go? Stocks? Cash? Commodities? Other bonds?
Those are the questions...maybe...
Wooossshhh on all assets not nailed down.
Monday everyone is jacked up......
Sunday Europe session sees heavy selling in equity markets overnight - US gaps lower with bond prices dropping hard - hopefully we get to 950 or 1000 and some buyers come in and there's a massive reversal that takes us to the holiday season. Budgetary leaders push for changes in debt ceiling deal (11/23, 12/23) where the markets push to new highs, as Goldman and Bernanke can push markets when volumes are light..
now bernankenstein starts to print shit
Got some TMV?
Why don't we just issue a new currency backed by the flatulence of Bernankenstein?
*****SPOOOOOOKKKKKYYYYYYYY******
BAD OMEN? GOOD OMEN?
Just went to the cash machine to draw out as much as possible in case Monday is a disaster. In the $900 stack of twenties....
THERE WAS A 1950 FRN "Reedeemable in Lawful Money at the United States Treasury or at any Federal Reserve Bank."
DO I TRY TO VISIT ZODIAC TIMMAH OR UNCLE BEN TO SETTLE UP?????
My wife found a silver dime in circulation last week. People are scrounging in places they haven't been in decades desperately looking for money. Yet they still don't understand the dynamics of the game, as in the case of this dime.
We are entering a new phase of hardship.
I've found quite a few silver dimes in circulation. People are dumb. Be glad your wife is not.
The best is if you go to a bank and ask to buy their half dollars. Some tellers get confused. One bank I asked said they had $600 worth, I bought them, and found $100 face value of 40% halfs as well as $10 in 90% silver. Another bank had $20, I said what the hell, and there were $17 worth of 90% silver halfs, including several Franklins. People are fucking dumb.
Only sure way I know to win at casino is find one that still has machines slots that use real halves, and clean out the silver ones
Cool! Looks like I need to start buying dime and quarter rolls from the banks to search through. My son will have a blast, especially if we find any siler coins.
Cool! Looks like I need to start buying dime and quarter rolls from the banks to search through. My son will have a blast, especially if we find any silver coins.
You arent kidding. My dad has collected coins his whole life. Two weeks ago he had to sell most of his collection to buy a car bc motor blew in his dodge after only 80k miles. He showed up at my door and gave me coins from the civil war bc I am a history buff. It was heart breaking. And thee is nothing I could do to help. Prepare for unrest.
I have never seen a Mercury dime in person... until yesterday when I was handed over my change at the local liquor store. There's a large senior citizen population in my neighborhood here in NYC. Many of them have been in the same apartments for decades. I couldn't help but picture some poor old-timer scrounging through a dusty coin jar thats been filling up since the 40's... "Hardship" was my initial thought as well.
I got a 'funny' looking 20 the other day, it was REALLY green. I looked and it was a series 1934 bill. whose closet/mattress has been keeping it all of these years?
Not to worry, S&P didn't grow a conscience overnight.
Thinking such things will make you go mad.
Where there was no conscience yesterday, there will be none today.
Gotta be careful what drives you mad.
The bigger farce than ratings agencies are the bond pricing services. Nobody really knows what half the freaking bonds in this country are really worth, because most are held by funds, not individuals. They're hardly ever traded. When they're traded, they change hands act phony prices, that yield enough to pay both parties to the deal. The pricing services slap a price on the bonds in the mutual funds every night... bond market is BROKEN.
Kudos to SP for having the balls to do it. !!
Look for the CEO to leave shortly to be spending more time with his family or pursue a lifelong dream to kayak or something stupid.
I'm also thinking that they'll push it back to AAA on some Friday night, soon when the markets are ready to break down hard - they'll announce the upgrade. They just created a new "bullet".
The administration trying to twist their arm virtually guaranteed this would happen.
Big market rally Monday because it should have...paron me, could have been worse.
Is it just me who thinks if A happens that will equal B,always has always does.Likewise if B happens it always equals C always has always does.What I am getting at is that with the current state of the financial system being everything happening from A-Z,does anyone know or can anyone predict anything with everything totally disfunctional to the point where wild swings in everything just become normality.We are soon going to see Physical Gold and Silver go hyperbolic because to leave them will just be to risky no matter how calm and profitable other things look the risk will just be to great.We are reaching Billionaire one minute and Shoeshine the next as one mistake could cost you the lot.
The question has to be asked, since Moody's and Fitch have not downgraded and S&P has, what effect will this have on funds which must invest in only AAA-rated investments? Do they just throw there hands in the air (not wanting to act) and say, "Well, majority rules..."
man i just don't know. if we have a bank run you won't be able to get more than $999. any cash withdrawl over $1000 requires a brach representative to check your signature at many banks. the FDIC isn't going to back up any accounts since there were fine print changes that enables them to weasle out of backing up interest bearing accounts.
the treasury will use it's only backstop and revalue US gold holdings. since we know the treasury actually doesn't have any gold you are going to see a confiscation effort and an offer of somewhere around $750 per ounce to trade in your gold. the treasury will then revalue the confiscated stash to make upfor the budget shortfall.
the only outcomes are massive inflation making your dollars worthless or take your gold and flee the country where confiscation won't occur.
or the market will shrug it of and we'll get QExinfinity and you'll get your $1000 LULU stock which you can sell to buy a small coffee at Dunkin which will be worth $10k a share cause everyone needs donuts during armageddon.
adr, not to worry
sheep don't run
Sure they do. All you have to do is get one running, and the rest will follow.
Thought you could be right--that isn't a run, it's a stampede.
This is Bullish!!!!! .... just not sure for what .....
we'll be back to the March 09 lows in no time ( a few months). The big question is will it hold there.
Or, the other way to look at S&P's little fit (South Park, "I'm slapping you silly")
http://www.youtube.com/watch?v=EKRhxvmtass
Oh God, let the spin begin.
Bwawney Fwwwank was on MSNBC crying and telling people not to listen to S&P, they don't matter.
Jared Bernstein just trotted out the whole "relax, this is just one out of the 3 big ones, we are all good" argument.
Rachel Maddow might cry.
An Obama official says it's "Amateur Hour" at S&P.
Of course Timmay is a fucking idiot and was wrong.
And the best part was someone saying "Treasuries are THE SAFEST BET ON THE PLANET! Where else will investors go? Europe is in turmoil, Asia has slowed...so that leaves Treasuries!" I guess he's never heard of silver or gold.
QE3 in 5..4...3...2
You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. S & P are not fooled.
Getting myself some more physical gold/silver on Monday at Thursdays price.
WOOHOO.
Bonfire of the fiat paper currencies is at hand.
I pray for those people not prepared.
buy some physical tonight from apmex ...
Exactly. I was looking at their 1 oz "mint varies" rounds this afternoon. When I went to buy a few minutes after the debt downgrade was announced--GONE!
Had to buy junk instead.
http://goldandsilver.ebay.com
You can still get some reasonable quanities there, saw some 100 oz lots of Philharmonics, 20 oz rolls of ASEs, etc. Lot of my FRNs have been going to Pb and food, but I just got some of the 3 oz ASE lots and a half roll of Walking Liberties right at spot on Thursday.
A good portion of my PMs have come from there, and I've never had a problem. The biggest worry was that one time- and only one time, a package arrived two days later than the seller said it would. The nice thing is that most of them sell with insurance and in opaque packages from private parties- as far as the post office knows, it could be anything from gold to a pewter statue, so they just slide right through.
+ All (is) Vanity
The local coin shop closed it's doors right after the take down this week. I tried calling and got the answering machine.
It said "I'm not selling anything at current prices".
Neither am I.
Dow One Thousand Caps ready?
And democrats are already blaming the tea party for the downgrade... this is gonna be fun.
Kind of ironic considering that they were pretty much the only congresscritters who actually wanted to make real cuts.
USA! USA! USA! ...
Now that we will have rising interest rates. is this the precursor to Operation Twist aka QE3 re: the Fed capping interest rates?
What's sad is that I know gold / silver / mining shares should go straight up on Monday, but with these "markets", who the hell knows?
Sunday night / Monday should be VERY interesting.
Careful with the miners. Although, true, they hold the real asset (gold or silver or whatever metal or mineral) in the ground and on the balance sheet, in the meantime, the tide either rising or falling will lift or lower all ships. Also, plenty of market players are long the metal proxy (like GLD or SLV ) while simultaneously short the miner equivalent (like ABX for gold and SLW for sliver) so as to benefit from the play, but have protection for a market dislocation.
This is getting to serious bring back JOHNNY BRAVO that retard shit who went to college and was still as numb as a piss stone.
I have to go do some ( SERIOUS HOME WORK) You contributers are far too smart for me... Have a wonderful weekend everyone.
Thanks for all your great posts! I laughed my ASS off when it was really ugly this week. GOOD PEOPLE YOU ARE!
the bloom is off the rose
i think it's worse than that: i think those goddam rats of nihm have invaded the whole root structure; and what's worse, when nicodemus died the bad guys ended up killing justin and mrs. brisby on their bed of passion and then stole that sparkle stone...so they took over, started flooding the fields with fiat...you know the rest of the story.
so i think it's time to uproot the whole thing, slaughter the rats (not you, my friend...the bad, brisby killing rats) and then replace it with a begonia bush.
in the thick of the evening when the evening got tough/
she was too hot to handle and too cool to blush/
she wore scarlet begonia tucked into her curls/
i knew right away she was not like other girls,
janus
So is all this a Bang or a Whimper????
both, i think. and i'm pretty sure the relationship is causal. but what's contingent on what i don't know. I know i prefer bangin
Having a sale just in time for stacking pre the earthquake at 9.9 on the richter scale on monday,
Silver Eagles - $5000 each. Gold Sovereigns - $25,000.
Silver dimes - $750 each.
Limit one per household.
How much for a household?