Posted on 08/05/2011 5:51:21 PM PDT by GQuagmire
NEW YORK (Reuters) - The United States lost its top-notch AAA credit rating from Standard & Poor's on Friday, in a dramatic reversal of fortune for the world's largest economy.
S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about growing budget deficits.
U.S. Treasuries, once undisputedly seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany, France or Canada
(Excerpt) Read more at news.yahoo.com ...
I think it was my post at #197 that set him off.
Sounded like a Ron Paul supporter ,claimed to be conservative then went nasty like this is DU.
Mods are right on that crap.
Thanks Mods.
The Most Predictable Financial Calamity in History
24 January 2011 118 Comments
By Greg Hunter’s USAWatchdog.com
In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2). The reason, according to the Fed, was “progress toward its objectives has been disappointingly slow.” So, to try and turn the economy around, the Fed said, “. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.” (Click here to read the complete announcement from the Fed.) QE means the Fed basically creates money out of thin air to buy debt. The current money printing orgy is financing more than half of U.S. government right now. The first round of QE bought toxic mortgage debt and bailed out the bankers.
What was not said in the press release was much more important and may go down as one of the biggest turning points in the history of America. Bringing on QE2 meant QE1 ($1.75 trillion) failed to provide a sustained recovery. It also exposed the $12.3 trillion total spent or loaned by the Fed since the meltdown of 2008 failed to give the economy a lasting boost. The Fed did save some businesses and all the big Wall Street Banks from bankruptcy, but we now know nothing has really been fixed.
This brings me to one really important question. I put this question to a group of well-known market experts, economists, investment bankers and big thinkers. The five guys you are about to hear from have at least one major thing in common. They all predicted tough times for America when most didn’t see it coming. So, I asked them all last week to peer into the not-so-distant future for their take on “What happens when QE2 ends?”
World renowned gold expert Jim Sinclair said, “States and Municipalities can and will go broke. The economic impact will act to foil QE. That will result in QE to Infinity regardless of MOPE. (Management of Perception Economics) Therefore, Washington and the Fed will backdoor rescues by buying State & Municipal debt, a form of QE.”
Next is prolific writer and author James Howard Kunstler. He specializes in novels about fictional depictions of the post-oil American future. Here’s what Kunstler says about the end of QE2, “My guess is the Fed will find some other way to buy distressed securities or “investment-like” things. The models for that are the Maiden Lane portfolios (there’s more than one) which are stuffed with crap like bankrupt hotels. Yes, the Fed owns bankrupt hotels! If they don’t buy up what are essentially loans gone bad, the system sucks itself into a black hole of compressive deflation. That outcome is likely anyway, because the Fed won’t be able to keep up with loans gone bad.”
Rick Ackerman, professional trader and founder of the website and newsletter called “Ricks Picks,” says, “I don’t think there’s a snowball’s chance in hell that promiscuous easing will end, regardless of what the fraudulent successor to QE2 is called. The commentary running right now at Rick’s Picks says that easing in the form of a U.S. bailout of cities and states could become politically necessary as early as this year, although a decision to do so would trigger the worst run on the dollar in history. Look for the bailout to happen anyway, but in a way that tries to obscure the fact that it is being done with funny money. The subterfuge won’t work for long, since public workers will figure out quickly that unless their retirement benefits are indexed to inflation, they’re going to get paid in confetti.”
James Rickards is a heavyweight in the world of finance. He is an expert in Threat Finance & Market Intelligence. “What happens when QE2 ends?” Rickards says, “The Fed never said that QE2 would end; that’s a popular misconception but they never said it. What they said was that they would buy $600 billion of intermediate term Treasury securities by June 2011. They never said that was all they would buy. They never said they would stop. The comments were carefully worded so that $600 billion by June was a targeted minimum but they never said anything about a maximum; technically there is no maximum. The first QE program ended in 2010 and the economy immediately began to fall into a double dip. QE2 was hastily put together to truncate the double dip. If they end QE2 the double dip scenario is back on the table. Therefore they will not end it. They will keep monetizing debt, whatever it takes, as long as it takes until there is a self-sustaining recovery. However, none of the predicates of a self-sustaining recovery are in place, therefore they will just keep printing money as far as the eye can see until the process becomes dynamically unstable and the dollar begins to collapse. So, bottom line, it is a mistake to talk about the “end” of QE2 because there is no end in sight.
Finally, economist John Williams of Shadowstats.com predicts a financial meltdown even if QE2 is extended. Williams told me, “I think you will see much greater economic and systemic-solvency troubles ahead than commonly are expected. Accordingly, I would expect a QE3, or an expansion of QE2 before it is scheduled to have been run through.”
I can’t imagine how the U.S. could stop printing money in June and then turn around and ask the world to start buying our debt again at a rate of $75 billion a month. Of course, we would want to pay discount rates in order to keep mortgages affordable and real estate prices from crashing. There would be no legitimate buyers unless we were paying much higher interest rates. Higher rates are the last thing the Fed wants to see because it would kill what little is left of this so-called “recovery.”
In summary, all the experts I polled think QE Will Not End. That will surely mean an imploding U.S. dollar and exploding inflation. This is scheduled to happen by the end of June, making this the most predictable financial calamity in history.
http://usawatchdog.com/economic-stimulus-quantitative-easing-qe3/
Wall Street got wind of this days ago, hence the huge selloff.
I think “ride it out”, “be a long term investor” are in the financial advisers handbook.
No wonder they are the happiest profession, they make money on deposits no matter if you do or not. Holding has no negative consequence for them. Cash earns no commissions and has no upside.
We have been scammed for the last 30 years by this 401K bullshit.
I wonder how many people got tipped off to this even beforehand? Let’s see which politicians shorted their positions in the days leading up to this.
Another first for this historic president.
Oh no pics allowed. Np press, no photos. You think he wanted his party pics plastered all over the news? He parties while America crashes. He wanted no pics, there were no pics. He is EEEEEVVVVIIIIILLLL!!
You had to check? LOL
If only the Tea Party had not warned us about this! It would not have happened.!
Welcome to the Obama Depression.
Indeed it is.
As soon as Hamilton’s reconstituted government debt hit the market, it was higher rated than ANY established government’s debt. Ours was only about two years old.
The free market is a lot smarter than S&P (who rated packaged loans to homeless people living in a cardboard box that Bawney Fwank and the CRA coerced them to make AAA)
Don’t expect 2 year Treasury rates to rise from 0.31% to Jimmy Carter 19% on Monday. You’ll have to give it some time.
What pisses me off is I told the guys at work to sell. They did. And I’m down. F@@@ me running. Had too much on my plate for the moment is my frail implorationality.
“Probably why they picked a fight with the Republicans...so they could share or shift the blame.”
Republicans PASSED a Balanced Budget Amendment.
Democrats killed it.
Republicans PASSED Cut, Cap, And Balance.
Democrats KILLED IT.
The only thing Obama GAVE A DAMN ABOUT was pushing the debt limit past the 2012 election, and he got that, in return for basicly NOTHING....
That’s the reality, but by Monday, all you will hear is how it’s ALL the fault of those MEAN Republicans, and the EVIL, RACIST, TERRORIST TEA PARTY!...
A 2% tax on all sales including stocks and bonds, would be a good thing.....along with no corporate income taxes, no income taxes, etc. I have read that we could bring in around $20 Trillion dollars a year like this, and pay off the debt in 5 years, causing a economic boom the likes we have never seen.
Can you please tell me just what the “ end “ is in your view ? TIA
Yep
If you don’t agree with everything Obama says and does then you are a rabid racist that wants to bring back Jim Crow laws.
Mutual funds sell at the closing price of the day so that is fukt’d.
Stop loss orders wont’ get in early enough.
I suggest drinking heavily while you can.
Sucks doesn’t it? Work your whole life, save, do without some things, do all the right things and you lose to the point you can’t retire. Losing that is just about the same as losing it all isn’t it?
RATS in charge in CONGRESS since 07 Many forget that the 08 budget was theirs they have been saddling America with debt since Nancy and Harry took charge.
B U M P
Well of course with Obama the buck never stops there....
Just say it wasn’t you...
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