S&P Downgrades US To AA+, Outlook Negative

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In summary, the credit rating agencies downgraded the United States due to concerns over the effectiveness of American policymaking and political institutions. The downgrade is mostly due to a failure to cut spending, and the fear is that we'll inflate our way out of increasing government obligations. Mainstream republicans and democrats didn't want to cut spending enough, and the tea party was the only political faction that had a plan that would have avoided a downgrade. The senate investigation of the credit ratings agencies a few years back showed that they were accused of giving triple A ratings to packaged sub prime loans. It looks like it is pay back time.
  • #141
You people are seeing things that I find hard to believe. Financial markets on fire off the shoulder of Wall Street. I imagine dollar bills glittering in the eyes of shorters near the Federal Reserve gate. Hesitate, and all these profits, will be lost, like tears in rain.

[PAUSE]...[/PAUSE]

Time to buy.
 
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  • #142
Astronuc said:
China is bucking that trend. :biggrin:

China is still in many ways a developing country, which is one reason it has a trade surplus, and it's also one that cheats. Remember, China artificially keeps its currency devalued. No matter how weak the U.S. dollar gets, the Chinese currency remains weaker, which gives China a constant artificial trade advantage over the United States, as a weak currency helps the country's exports. We have seen this with America in how a weak U.S. dollar helps American exports and American manufacturers by making our goods cheaper to export to other countries. If China was to let their currency float freely and it grew stronger than the U.S. dollar, it would be cheaper to export goods to China than to import Chinese goods.

As China evolves into a wealthy nation, with a higher GDP per capita, and is hopefully forced to stop manipulating their currency, they will likely begin to see their trade surplus shrink and possibly a trade deficit occur. I also do not believe China is prospering right now in the way many think. There is this perception that the Chinese "model" of economy has proven resilient to the global recession, but I think think that's a bunch of nonsense. Their economy has shown itself to be very tied to the global economy. When demand for Chinese goods declined dramatically because of the global recession, China enacted a massive stimulus to counter it. Basically, much of the economy's demand right now is being driven by the government. I think this is because the Chinese government is terrified of what will happen when the economy really tanks, because of the massive civil unrest that likely will break out (the Chinese government already has been censoring about the uprisings in the Middle East for example). There are zero social safety nets in China. So when mass unemployment begins to occur, all hell is likely going to break lose.

Unlike America, China can make a stimulus work, at least for the short-term, for a few reasons:

1) No environmental laws or protection of private property. If the government says they're confiscating your farm to build a road through there, tough potatoes. If environmentalists complain about some habitat or ecosystem being destroyed, tough potatoes. So it's a lot easier to engage in infrastructure building very quickly.

2) No needing to run a deficit and take on debt at the moment to spend on stimulus---this undoes two reasons as to why stimulus in America may not work, which are that stimulus takes money out of the economy in one form to inject it in another form (by taking on debt), and also, no one panics over seeing a massive debt or deficit run, because there is none, as the government is using reserves. The government can also lie about the statistics if it wants to. China is likely burning through its huge cash reserves though.

3) Around 2/3 of the economy is still nationalized. The banks are nationalized. So the banks are ordered to give huge amounts of loans, and the construction companies and other nationalized enterprises are ordered to take the loans and build, build, build. Imagine if the U.S. government nationalized the banks and the construction industry, and then decided to engage in $2 trillion worth of building skyscrapers. It might well create the illusion of economic growth while it was being done, but then you are stuck with $2 trillion worth of useless infrastructure. This is likely going to happen to China, which is building whole cities that are empty right now.

China likely has a property bubble going on that is more massive than the one the U.S. had. Their stock market and their real-estate market can't just keep going up forever. But of course, just like with the Dot Com bubble, just like with the housing bubble, just like with pretty much every major bubble in history, and now with China, we hear, "This time is different." All new nations on the scene economically tend to look invincible and think they are invincible until the dynamics of the market slap them in the face. Happened with America with our housing bubble (where many economists thought we had reach a new era, in which major recessions were a thing of the past), to Dubai, to Ireland, to Japan at the end of the 1980s, to South Korea, to various other nations, and it will happen to China at some point.

China right now lacks the domestic demand to drive its economic growth. It's growth has been from exports (which have declined because of dried up global demand), and infrastructure building (much being driven by the government to make up for the drop-off in exports). Building infrastructure can give the illusion of GDP "growth" that isn't real. I also think China's stimulus to a good amount is driving the German economy, as they are exporting a lot to China at the moment. But the Chinese government can only do this for so long. If their economy truly was strong, it should have been able to just contract along with the rest of the global economy IMO, as economies are cyclical.

I also think the whole notion that the Chinese government focuses on the long-term economically, whereas in America, with our chaotic democracy, we only focus on the short-term, is nonsense. The Chinese are very focused on the short-term, as local and provincial governments have economic growth targets to meet, which they do usually through infrastructure building, which has resulted in them building up nearly $2 trillion in liabilities that the Chinese government may now have to assume. The Chinese stimulus also displays a major focus on the short-term.
 
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  • #143
hahahaha, i can't believe Greenspan actually let the cat out of the bag. told ya! :biggrin:

https://www.youtube.com/watch?v=-_N0Cwg5iN4

http://www.cnbc.com/id/44051683

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press

RUKMP.gif
 
  • #145
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  • #146
I borrowed this Peter Schiff clip from another thread - dated 3/1/2011.
https://www.youtube.com/watch?v=cJ9mMEDoN5s
 
  • #147
Schiff is a straight shooter, but i don't know about that gold thing. banks will hoard gold and manipulate the economy that way, too.
 
  • #148
Proton Soup said:
Schiff is a straight shooter, but i don't know about that gold thing. banks will hoard gold and manipulate the economy that way, too.

I don't know where the guy is getting inflation from. I think the prospect of disinflation is scaring the hell out of the fed. He's also making the assumption that the United States is setting the price on Gold. I'm not sure that is true. I believe the developing world is setting the price on gold now.
 
  • #149
SixNein said:
I don't know where the guy is getting inflation from. I think the prospect of disinflation is scaring the hell out of the fed. He's also making the assumption that the United States is setting the price on Gold. I'm not sure that is true. I believe the developing world is setting the price on gold now.

I think he's looking at 2 factors.

The first is asset deflation related to the housing industry. We haven't reached bottom yet and the credit is tight for home buying - rates are good but loans are tight. The second is the printing of money.

Then, if you look at the rest of the C-CPI-U components - most items have RISEN in cost. Caveat -not to over-simplify - Commodities are a bit tricky.
http://www.bls.gov/cpi/cpisuptn.htm
 
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  • #150
I wouldn't bet too much on Schiff- the people that do tend to lose money. If you had followed his suggested plays you would have lost money in 2008,9,10. We haven't seen hyperinflation, etc. The only thing he seems to have called correctly is gold, but for the wrong reasons (gold prices are rising as demand goes up, there isn't hyperinflation).
 
  • #151
https://www.youtube.com/watch?v=eoosS9TJ0NQ
 
  • #152
Yes the demand for gold is going up. The useful question is why is the demand for gold going up? Sudden big demand in electronics? Also while Schiff forecasts inflation, he seems to withhold the hyperinflation call unless and until foreign states stop buying US debt. He doesn't use the prefix hyper- in the video up thread.
 
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  • #153
mheslep said:
Yes the demand for gold is going up. The useful question is why is the demand for gold going up?

The demand for all safe assets is going up. This has nothing to do with inflation- look at the break even between the 10 year TIP and the 10 year treasuries. The market is not expecting inflation.

People are craving safe assets however. Hence, high demand for safe bonds of all kinds and high demand for gold, etc.
 
  • #154
ParticleGrl said:
The demand for all safe assets is going up. ...
Yes, what is 'safe' about them and thus placing them in demand?
 
  • #155
Storm is still raging on the markets.
Seems befitting:
 
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  • #156
mheslep said:
Yes, what is 'safe' about them and thus placing them in demand?

There is no credit risk and little likelihood of supply shocks? Still, when (hopefully) things start turning around, and people move out of gold, a lot of people will lose money.

IF people are using it to hedge inflation, wouldn't the break even between the TIPs and the standard treasuries be large? After all, if the market expects inflation, we should see it across the board.
 
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  • #159
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  • #161
... however I know this fake won’t do it ...


https://www.youtube.com/watch?v=eoosS9TJ0NQ

I’m speechless.

When you thought the Tea Psychosis had reached the ceiling, Bill Still appears and run his balloon head thru the birdhouse roof!

What is this, Hillbilly Economics? One Flew Over the Cuckoo's Nest Economics?

Probably one of the most hilarious morons I have ever seen, and at 5:25 even the bird gets enough – Cuckoo has left the building! ... Or is it a sitting duck!? Muhahaha! :biggrin:

And it gets even better:


https://www.youtube.com/watch?v=htTkuV-nuSI

(The "Swedish Saving Banks" has balance sheet of 0.1% of the market)

"It’s a great start to lead Sweden to a sustainable economic future as the rest of the world sinks into deepening depression."​

HELP! I can’t see! Laughing tears all over my face! HAHALOLHAHA! :smile:

This guy is actually a communist! LOL! More communist than any extreme lefty you could find in Sweden! HAHA! He wants us to start using the Old & Safe plate money again:

272px-Swedish_plate_money_in_the_British_Museum.jpg


LOL! I’M DYING! :smile::smile::smile:

And here comes Grande Finale, for those who want to destroy 2 hrs of their life - The Secret of Oz!


https://www.youtube.com/watch?v=swkq2E8mswI

You don’t need to watch it all, already at 0:01:00 Buffalo Bill explains the secret about The Wonderful Wizard of Oz, and why the economy is so bad...

AMAZING! MUHAHAHA! :smile::smile::smile:

I don’t know much about http://en.wikipedia.org/wiki/Gary_North_(Christian_Reconstructionist)" , but at least he has a Ph.D. in History, which is more than Hillbilly Bill will ever get:
http://www.garynorth.com/public/7262.cfm

Sitting Ducks: Why the Tea Party Movement Is Vulnerable to Economic Charlatans, Ignoramuses, and Statists

Gary North
...
Bill Still is Ellen Brown without footnotes. He gets a wider hearing, because he has produced videos. Videos are easier to watch than books are to read. They take much less time; they take much less intellectual commitment; and they do not require any degree of self-discipline to view them. I do not expect that anybody in Congress is going to pass a law, or fight a law, based on having watched a Bill Still video.

There are thousands of people in the Tea Party movement who have been seduced by an economic infiltrator from the Left: Ellen Brown. If the infiltration process is this easy, then there is something fundamentally wrong with the Tea Party movement. These people have not done enough reading, and they are ignorant about the basics of economic cause and effect. But, then again, in the realm of monetary policy and theory, so was Milton Friedman.
 
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  • #162
DevilsAvocado said:
... however I know this fake won’t do it ...


https://www.youtube.com/watch?v=eoosS9TJ0NQ

I’m speechless.

When you thought the Tea Psychosis had reached the ceiling, Bill Still appears and run his balloon head thru the birdhouse roof!

What is this, Hillbilly Economics? One Flew Over the Cuckoo's Nest Economics?

Probably one of the most hilarious morons I have ever seen, and at 5:25 even the bird gets enough – Cuckoo has left the building! ... Or is it a sitting duck!? Muhahaha! :biggrin:

And it gets even better:


https://www.youtube.com/watch?v=htTkuV-nuSI

(The "Swedish Saving Banks" has balance sheet of 0.1% of the market)

"It’s a great start to lead Sweden to a sustainable economic future as the rest of the world sinks into deepening depression."​

HELP! I can’t see! Laughing tears all over my face! HAHALOLHAHA! :smile:

This guy is actually a communist! LOL! More communist than any extreme lefty you could find in Sweden! HAHA! He wants us to start using the Old & Safe plate money again:

272px-Swedish_plate_money_in_the_British_Museum.jpg


LOL! I’M DYING! :smile::smile::smile:

And here comes Grande Finale, for those who want to destroy 2 hrs of their life - The Secret of Oz!


https://www.youtube.com/watch?v=swkq2E8mswI

You don’t need to watch it all, already at 0:01:00 Buffalo Bill explains the secret about The Wonderful Wizard of Oz, and why the economy is so bad...

AMAZING! MUHAHAHA! :smile::smile::smile:

I don’t know much about http://en.wikipedia.org/wiki/Gary_North_(Christian_Reconstructionist)" , but at least he has a Ph.D. in History, which is more than Hillbilly Bill will ever get:


For those among us that don't speak whatever language you've uttered - please translate or support?
 
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  • #163
I hope you understand the words by Gary North:

There are thousands of people in the Tea Party movement who have been seduced by economic infiltrators from the Left.

Bill Still is one of these infiltrators, and his so called "economics" is nothing but a fairytale joke.
 
  • #164
DevilsAvocado said:
I hope you understand the words by Gary North:

There are thousands of people in the Tea Party movement who have been seduced by economic infiltrators from the Left.

Bill Still is one of these infiltrators, and his so called "economics" is nothing but a fairytale joke.

The TEA Party movement wants to hold politicians accountable. They believe in no taxation without representation - which means don't spend my money unless I understand and agree with your plan. They also believe in maximizing the efficiency of Government - now that (I agree) is a radical idea.

Given the importance of free speech, I'm sure anyone that joins the TEA Party would be encouraged to put forth their additional ideas - it doesn't mean the ir ideas will be widely accepted though.
 
  • #165
what have we been infiltrated by?

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

The Fed Audit

July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

To read the GAO report, click here.
 
  • #166
~~

Proton Soup said:
what have we been infiltrated by?

http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

Umm... I take it, that it's quiet, is because everyone is reading the 266 page document?

What's the name of that new guy that J.Stewart made fun of because he didn't want to read 2000 page long bills? I think that dude had a point.

hmm... http://en.wikipedia.org/wiki/List_of_longest_novels" I ever read was Atlas Shrugged. Incredible book.

Wait! I think I've gone off topic. :blushing:

Today, my favorite stock went up ~50%, and I made ~$500 in one hour.

The S&P downgrade is a freakin' ploy to freak out amateurs.

Invest in the future.

please...
 
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  • #167
WhoWee said:
The TEA Party movement wants to hold politicians accountable. They believe in no taxation without representation - which means don't spend my money unless I understand and agree with your plan. They also believe in maximizing the efficiency of Government - now that (I agree) is a radical idea.

Given the importance of free speech, I'm sure anyone that joins the TEA Party would be encouraged to put forth their additional ideas - it doesn't mean the ir ideas will be widely accepted though.

Why do you feel that your ideas are more important than other Americans? I see this a lot with 'take our country back' rhetoric used by tea party. But does the country not also belong to me and others who disagree with the tea party view?
 
  • #168


OmCheeto said:
Umm... I take it, that it's quiet, is because everyone is reading the 266 page document?

What's the name of that new guy that J.Stewart made fun of because he didn't want to read 2000 page long bills? I think that dude had a point.

hmm... http://en.wikipedia.org/wiki/List_of_longest_novels" I ever read was Atlas Shrugged. Incredible book.

Wait! I think I've gone off topic. :blushing:

Today, my favorite stock went up ~50%, and I made ~$500 in one hour.

The S&P downgrade is a freakin' ploy to freak out amateurs.

Invest in the future.

please...

You can make a lot of money right now if your a long term investor.
 
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  • #169


OmCheeto said:
Umm... I take it, that it's quiet, is because everyone is reading the 266 page document?

What's the name of that new guy that J.Stewart made fun of because he didn't want to read 2000 page long bills? I think that dude had a point.

hmm... http://en.wikipedia.org/wiki/List_of_longest_novels" I ever read was Atlas Shrugged. Incredible book.

Wait! I think I've gone off topic. :blushing:

Today, my favorite stock went up ~50%, and I made ~$500 in one hour.

The S&P downgrade is a freakin' ploy to freak out amateurs.

Invest in the future.

please...

yeah, or what percentage of legislation is actually written by congressmen vs written by staff and helpful suggestions from lobbyists? i think the bigger problem is that simply too much law is passed. good law shouldn't require so much revision. instead of cheap walmart law that breaks every year, let's invest in durable goods.

i also read atlas shrugged. it's the literary equivalent of a physics textbook. you may gain some valuable insights, but it mostly feels like work.

and i haven't read the report yet, either. what i am interested in is the conflicts of interest, the magic of huge piles of money out of nowhere, and the fact that it takes an act of congress just to get an audit and get even a clue of what is going on.
 
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  • #170
SixNein said:
Why do you feel that your ideas are more important than other Americans? I see this a lot with 'take our country back' rhetoric used by tea party. But does the country not also belong to me and others who disagree with the tea party view?

If you pay taxes and want to bury your head in the sand - it's your choice - I want to know what they are doing my tax dollars.
 
  • #171


Proton Soup said:
yeah, or what percentage of legislation is actually written by congressmen vs written by staff and helpful suggestions from lobbyists? i think the bigger problem is that simply too much law is passed. good law shouldn't require so much revision. instead of cheap walmart law that breaks every year, let's invest in durable goods.

i also read atlas shrugged. it's the literary equivalent of a physics textbook. you may gain some valuable insights, but it mostly feels like work.

and i haven't read the report yet, either. what i am interested in is the conflicts of interest, the magic of huge piles of money out of nowhere, and the fact that it takes an act of congress just to get an audit and get even a clue of what is going on.

Newt Gingrich cited the report in the debate tonight and called for a thorough review of Fed activities.
 
  • #172
WhoWee said:
If you pay taxes and want to bury your head in the sand - it's your choice - I want to know what they are doing my tax dollars.

Just look up the federal budget.
 
  • #173
WhoWee, this is where I think you and most tea partiers go off the rails.

WhoWee said:
The TEA Party movement wants to hold politicians accountable.

So what; Democrats don't? I think the tea party is mostly nuts but I too want to hold politicians accountable. One thing has nothing to do with the other except that tea partiers think they are special somehow. Guess what; we all have the same basic complaints. My view is that the tea party wants all the wrong things for all the right reasons.

They believe in no taxation without representation - which means don't spend my money unless I understand and agree with your plan.

No, that is not what it means. It means you can elect a representitive and two Senators. It doesn't mean that you personally have to agree with every plan put forth. In fact, the nature of our system DEMANDS that we all make compromises. This is a concept essential to both liberty and democracy.

Do you elect leaders or puppets?

They also believe in maximizing the efficiency of Government - now that (I agree) is a radical idea.

Again, this is nothing but some kind of superiority complex in play. Do you really think anyone wants an inefficient government? Where the tea party and I part ways is not a matter of fundamental beliefs, but has everything to do tea partiers making ridiculous assumptions about everyone else. In reality you have said absolutely nothing here that we couldn't take out of a George Orwell novel.

Given the importance of free speech, I'm sure anyone that joins the TEA Party would be encouraged to put forth their additional ideas - it doesn't mean the ir ideas will be widely accepted though.

You haven't said anything. What ideas? Honestly, what I see is an entire movement dedicated to the very policies that nearly just destroyed the global economy, and still might, all wrapped in a flag.

And just to add cream to the tea:

When we needed to save the banking system from complete collapse, it was the tea party that led the fight against saving it.

When we need to balance the budget, it is the tea party that leads the fight against raising taxes on anyone - no matter how rich they may be - and instead demand immediate, draconian austerity measures that would futher weaken the already faltering recovery, and would affect the poor and working class the most. It looks to me like the ultimate propaganda machine for big business. Poor GE. How will they ever manage?

It was the tea party's own Michelle Bachman who said we should refuse to raise the debt ceiling - absolute lunacy by any measure! But there she is; a leading candidate.

At every turn, what I see is a movement bent on destroying the economy.
 
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  • #174
The irony of this coupled with claims of Obama's so-called "flowery speeches" is too much sometimes. More than anyone, the tea party is driven by hyperbole.
 
  • #175


SixNein said:
You can make a lot of money right now if your a long term investor.

"right now"? if you're long? :rolleyes::wink::smile::blushing::smile:

I was indoctrinated to investing by someone who I thought was a stock broker. Turns out he was merely a risk manager for one of the largest holding companies on the west coast. Little sh*t wasn't even 30. Now he's the director!

I think I absorbed some of what he was trying to tell me, as the following, is my mantra:
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.

Unfortunately for the country, my wish from a couple of years ago seems to be coming true:

OmCheeto said:
...I'd have preferred an L shaped recovery myself, as I have 8 years to continue investing before I retire. But that's just being greedy. :devil:

:frown:
 

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