Summarizing The Various Debt Plans And What Happens After The Now Assured US Downgrade

Tyler Durden's picture

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Archimedes's picture

But, but, but.....Timmy said "The US will NEVER lose it's AAA rating!".

Spirit Of Truth's picture

Ben promised him to print any money necessary to buy U.S. debt, so payment is guaranteed!

Investors: The $1 Billion Armageddon Trade Placed Against The United States

Ghordius's picture

I still don't believe the US will lose it's AAA rating this year.

Even in a glaring technical default the rating agencies are still paid by the TBTF banks and they would have to take up capital because of the Basle rules.

It's a great cover-your-ass-posturing-political-exercise. With a whoopee, we've found the way out parade at the end.

ibjamming's picture

It won't...Obama will declare that money will be created as needed...the Constitution says that the credit of the US will not be questioned.  The peole will agree because nobody who would riot, wants to be left without a check.

Transitory Disinflation's picture

Somewhere there is a room full of men all mass debating over the ills of the world.

mophead's picture

What will happen after a downgrade? Bonds will rally, watch and see.

SheepDog-One's picture

Tell it to mom and pops and the kids when theyre all moving back in. Enjoy.

SheepDog-One's picture

Effects of US going from AAA to AA? Surely better than expected, highly bullish. Besides, we've got a cool new 'Uber Congress'.

Id fight Gandhi's picture

You joke but you're probably right. Greece for all accounts has defaulted and the world now doesn't care, it did a few weeks ago, but who can remember back that far?

How much will rates go up as US bonds become more risky. Will the entities that hold aaa grade only jettison them as they no longer fit the risk model portfolio, or is this the new normal and keep on trucking?

Conrad Murray's picture

Exactly. The US can default and nothing will come of it. All the circle jerkers at the top will just change the rules if they fail to scare the money from their victims. No way they will take losses. There will be no implosion, there will be no loss of reserve status. At best there will be a dip to buy before all the sheep realize they've been had again.

downrodeo's picture

No one needs anyone we don't even just pretend...



GoinFawr's picture

David Bowie would like a word with you.

Id fight Gandhi's picture

Is anyone else like wtf? Why the stock market keeps holding up and the bond rates are so low?

GIANTKILR's picture

It's called: M-A-N-I-P-U-L-A-T-I-O-N!

Transitory Disinflation's picture

Treasury To Stop Funding Its Market Manipulation Fund To Delay US Bankruptcy

After pillaging the G Fund and Civil Service Retirement and Disability Fund (CSRDF), aka the Government retirement funds, Tim Geithner was just forced to resort to the final debt ceiling extension measure: suspending reinvestment in the Exchange Stabilization Fund, better known as the mechanism by which the Treasury manipulates the stock, bond and FX markets, often times indirectly (thank you Brian Sack and Citadel fat pipe) and on occasion with CIA assistance.

Tramp Stamper's picture

They can get more money from the cia slush funds that is holding all that money made from gun running and drug trafficking

Going Loco's picture

Anyone who is confused by the behaviour of the stock market in current circumstances needs to read this:

The author, Nadeem Walayat has been 100% right about 100% of the things he has written about since 2007 - in this article he explains why stock markets continue to rise and why 90% of people who read ZH and other similar blogs are doomed never to make money - our minds become numbed by fear.

ZH is a wonderful resource; I an amazed it is free and I will still use it to keep informed. But it is very important not to let fear grab you by the bollocks because if you do this you will never make any money.

mess nonster's picture

We are all pilgrims aboard the Patna, asleep on our way to the Holy City. The doomed ship drives on into the stillness, the rusted bulkhead slowly buckles under the immense pressure of the incoming sea...When did the crew let down the dory and escape? We will never know.

Troy Ounce's picture

The big problem is that governments are more scared of rating agencies than their voters.

This has to change.

Cash_is_Trash's picture

This has to change.

Nah, this fear is good.

; -)

Global Hunter's picture

and the ratings agencies are scared of the government

Id fight Gandhi's picture

Now that you mention GSEs how can we separate them from the national debt? All goes down together.

Sudden Debt's picture

Tyler, what do you think a downgrade would do to the stockmarket?

Greece it's stockmarket for example is at par with gold since the downgrades. Could the DOW do the same?

Id fight Gandhi's picture

Do you mean a purely numeric par? Gold,index?

I'm stunned that greece has defaulted and the euro barely budged.

lolmao500's picture

The AA rating is a joke. America should be downgraded way below that. It's gonna be interesting to see what China does/says when they see their holdings of $ lose hundreds of billions of value in a very short time.

SheepDog-One's picture

'AA' lolmao based on nothing but a printing press. People who think this is the 'new normal' are about to be rudely awakened....just think 'SS icewater bath plunge at 3 AM', and youre close.

SheepDog-One's picture

Once the endgame is complete, seizing everyones pensions and 401K's for 'Treasury annuitization', then they dont really care that everyone is 3rd worlded and starving.

$5 trillion sitting in ETF 401K's and pensions, and people think thats not the target? Please. 

They know the days of fleecing the public are over, bottom line you cant squeeze more golden eggs from the dead goose. 

wombats's picture

Why only downgrade to AA?  Isn't that just a slap on the wrist?  Wouldn't a downgrade to near Greece levels be far more realistic and honest?  Just asking...

Hansel's picture

The rating agencies have a policy of not downgrading anything until after they default.  Enron, Bear Stearns, AIG, GM, Greece, etc.

TomGa's picture



So much for bipartisan two-part plans... (from the Washington Post) 25 JULY 11  “The Speaker, Sen. Reid and Sen. McConnell all agreed on the general framework of a two-part plan. A short-term increase (with cuts greater than the increase), combined with a committee to find long-term savings before the rest of the increase would be considered. Sen. Reid took the bipartisan plan to the White House and the President said no.”



SheepDog-One's picture

Oh well so much for that...time for 'Uber CONgress'.

unununium's picture

This story might merit the introduction of a new background color for the pin.  Not the <blink> tag though.  Let's save that for CPL inbound missiles airborne.

oogs66's picture

Euphoria in Europe already seems to be done.

Franken_Stein's picture


Put the criminals in the clink !


the not so mighty maximiza's picture

The privately owned Federal Reserve will continue printing no matter what the congress does.

caerus's picture

There's also this...

Amendment XIV

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

RobotTrader's picture

Bears are not getting much traction on this news.

Bonds and stocks are not really off that much from their highs.

Version 7's picture

Folks are in extasy with the new layout.

andybev01's picture

The only bears that your typical Jane & Joe are interested in are in Yellowstone and messed up a couple of kids last week.

That's the only carnage that they understand.

Commander Cody's picture

Default means we wouldn't pay on our debt obligations.  We could meet debt obligations with the current revenue stream.  Only thing, there would be other things that might not get paid, like subsidies to corporations, salaries to the bloated government structure, bennies for thieves, etc.  Tough choice, eh?

AustrianEconomist's picture

A downgrade is a must if the rating system is not a complete fraud already. The US should be a CCC rating just above junk because that is reality. There is no way for the US to make any significant budget cuts, the US is bankrupt, end of story.

Check out the latest from the Capital Research Institute (CRI):

The Financial System - A House of Cards

Contra_Man's picture

Tonight on TMZ: "The NYSE's TMV"

Yardfarmer's picture

glass ceilings, debt ceilings and ceiling wax. the current media circus over the so-called "debt ceiling" is more smoke and mirrors over layering the 800 pound behemoth that has financial markets and the world economy in a death grip strangle hold-OTC derivatives. for that you might more appropriately require a debt galaxy with several black holes to absorb the insane and exponentially quadrillions of "debt" inextricably bound up with convoluted counter party madness. the architects of this universal economic iron maiden foresaw its consequences and they and their minions will mercilessly extract every penny in gold from the inviolable contractual obligations that encumber and are presently suffocating the institutional and sovereign entities upon which these vampires are battened 

hedgeless_horseman's picture

For what it is worth (very little) I believe it is sealing wax.

highwaytoserfdom's picture

Gang of six brekdown from 

To talk even remotly about liquidating the the five banks with derivative exposure which Paulson moved GSE's with these clowns called the "gang of six" only Corburm had a real job. Like Stephen Moore but his " Club for Growth" is a sham for stalling real growth..  Moore wors for WSJ owned by Newscorp.  You have  bankers and  FED cronies stopping job growth and iniovation...  Video rental? Is that the best we can do?   Here is tha "Gang profiles"  


remind you of the guy who figured this thing out  141 years ago.  

"The Rothschilds, and that class of money-lenders of whom they are the representatives and agents -- men who never think of lending a shilling to their next-door neighbors, for purposes of honest industry, unless upon the most ample security, and at the highest rate of interest -- stand ready, at all times, to lend money in unlimited amounts to those robbers and murderers, who call themselves governments, to be expended in shooting down those who do not submit quietly to being robbed and enslaved." Quote by: Lysander Spooner
(1808-1887) Political theorist, activist, abolitionist
Source: "No Treason #6" (1870)




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oldmanagain's picture

CNBC seems to believe that providence will provide a good outcome.  

Bush tax cuts are the real monster in the room.  Blaming SS is pure baloney. Medical expenses are going thru the roof but could be socialized and be much cheaper, and better.  Same with education.

The current debate favors the 2%.  They could win as they control the game. However, this outcome is not viable.  Many that now support the 2% are very rapidly going to see how bad they have been duped.

At some point, the globalists will be cut off, this is not good but probably necessary to start over on a more constructive path.  AS I write, I listen to a plea to help the our global banks with relaxed rules and rates.