- - - - - - - - - - - - -

Saturday, August 06, 2011

$ :(

Sorry, I was out, what just happened?

S&P downgrade from AAA to AA+

Has all my doom-mongering come true? Has the reality that a depression is a series of systemic recessions setting in yet?

OK, so the boffins are not impressed with the debt ceiling and spending cut plan then. $14.7 Trillion and heading towards $14.7 Zimbillion. It makes it a bit of an obvious call and it's good the boffins haven't been influenced by the sort of wilful optimism of the markets or the bravado of American imperialism that helped create the credit expansion and resulted in the 2008 crash and this consequent depression.

The US dollar is holding though.Wasn't that Chinese Ambassador on 'The Nation' this morning saying they were buying Euro now.

So the Chinese are bailing on the US. Oh dear. Luckily for them the fear in the markets have driven people to US Treasuries and the dollar has risen in value... even though its S&P credit rating has been downgraded. Oh the irony. But enough of these games! China go now.

This temporary rise in the dollar's value will let them sell down at a better price. Will they evacuate the dollar and revalue the Yuan? Whenever it will screw the US the most they will do it, right when the Yanks need them. Go now.

Dow down 6% for week.

Gold $1662/oz - that's a better reflection of the value of the USD.

NY Times:

WASHINGTON — Standard & Poor’s removed the United States government from its list of risk-free borrowers for the first time on Friday night, a downgrade that is freighted with symbolic significance but carries few clear financial implications.

The company, one of three major agencies that offer advice to investors in debt securities, said it was cutting its rating of long-term federal debt to AA+, one notch below the top grade of AAA. It described the decision as a judgment about the nation’s leaders, writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances.

“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 challenge,” the company said in a statement.

The Obama administration reacted with indignation, noting that the company had made a significant mathematical mistake in a document that it provided to the Treasury Department on Friday afternoon, overstating the federal debt by about $2 trillion.

Quibling about a few trillion. The fact that even has the possibility of happening is why they are being downgraded. It's monopoly money heading towards confetti.

The downgrade could lead investors to demand higher interest rates from the federal government and other borrowers, raising costs for governments, businesses and home buyers. But many analysts say the impact could be modest, in part because the other ratings agencies, Moody’s and Fitch, have decided not to downgrade the government at this time.

The announcement came after markets closed for the weekend, but there was no evidence of any immediate disruption. A spokesman for the Federal Reserve said the decision would not affect the ability of banks to borrow money by pledging government debt as collateral, a statement that could set the tone for the reaction of the broader market.

S.& P. had prepared investors for the downgrade announcement with a series of warnings earlier this year that it would act if Congress did not agree to increase the government’s borrowing limit and adopt a long-term plan for reducing its debts by at least $4 trillion over the next decade.

Earlier this week, President Obama signed into law a Congressional compromise that raised the debt ceiling but reduced the debt by at least $2.1 trillion.

And a big Llyoys loss on the ticker - is that from Chch?



At 6/8/11 11:20 pm, Blogger collective.desires said...

China has bailed out the US?!

Hang on...

Aren't the Chinese the awful "red menace"?

Just remind me - who won the Cold War again? I could've sworn that capitalism trumped marxism?!

Or did those cunning marxists adopt capitalism so they could beat those awful capitalists at their own game?!

Oh dear god. It was much easier during the Cold War...

Us - The Goodies.

Them - The Baddies.

Klingons - Baddies. Then our allies. (Oh wait, I think the Klingons aren't real. they are fiction. Or am I thinking of "The War on Terror"?)

*aaargh* My brain hurts...


USA - credit rating down-graded from AAA to AA+

Damn. It couldn't happen to a nicer capitalist, industrial/military complex, Empire. Cannibalised from within...

Oh, those talking apes in the Far Future will never believe all this...

At 6/8/11 11:21 pm, Blogger Nitrium said...

This is what you get if you spend more than earn, we will all be Greece soon. Hopefully NZ learns a lesson and abandons the folly of "borrow and hope", and brings a balanced budget. We need to have a national discussion on what we can and can't afford, and get off this obviously unsustainable path. Keynesian economics simply does not work for credit driven recessions.
Incidentally, we never really practice genuine Keynesian economics anyway: Keynes advocated SAVING and INCREASING taxes during boom times to produce a large surpluses to spend during recessions. Of course we do the EXACT opposite of this, i.e. increase Govt spending and/or cut taxes whenever there is a budget surplus, and BORROW when there is a recession. There is no free lunch.


Post a Comment

<< Home