In a move not shocking to anyone who has been paying attention these past few weeks, S&P has downgraded government debt to AA+. Interestingly the downgrade was delayed due to the White House questioning the models underlying the analysis- saying that they were off by a few trillion dollars" Even so, the company has issued a statement downgrading U.S. debt, and affirmed the A-1 short term rating.
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Monday should be fun.
Jesus Christ, I give them props for going ahead with it. They issued that statement a few weeks ago calling for $4 trillion in cuts and didn't want to look like fools once that target wasn't met. It's the right thing to do but at a terribe time. Who's with me thinking they'll be another 5-10% drop next week?
oh fuck.
exactly my thoughts.
haha I just read this.
and came on here to post this guess i have been beaten
Interest rates will go up if S&P ratings really mean anything. Hopefully the DJI won't dip again like it did yesterday because of this.
why did they do this on a friday night? interesting to see how the yields will react.
Wait until it all tanks then buy like it's a clearance sale at a department store.
Why wait? a few puts right now will do the trick....
God willing, this is the final nail in the coffin for Obama.
My comment in other threads...
Dear Mr. Obama you can't spend anymore. Face the facts and get a real plan in place for once, you can't just throw $$$ at the poker table anymore.
Ritholtz is right though the way the S&P did this was poorly executed. Very poorly executed.
I wonder what happends to Financials Monday
Guess at the Dow on Monday. I say -600
Close. 633.
Dude, that's close to '08 numbers. It's definitely not that bad.
How so? The problems of 08 were never solved.
It's not, this is an OPINION and that all it is, this doesn't change the govts ability to pay its debts but the market is so fking irrational right now and driven by the same sort of fear that we saw in '08 that 500+ drop is likely.
US is now rated below Liechtenstein. I didn't even know Liechtenstein was a country. What a joke.
On a per-capita basis, Leichenstein's one of the wealthiest countries in the world genius.
Wow I am impressed that they actually stepped up and went through with it.
Obama isn't getting a 2nd term lol
While this is clearly not great news, one cannot be surprised. As someone posted above (maybe the OP), the S&P was looking for $4 trillion and instead got some BS "$2.whatever" trillion. As for doing it on a Friday night, I'm not sure what to think. In some sense it allows for the news to be digested before Sunday's Asia open.. on the other hand, people could dwell on the news the entire weekend, making it even worse than had they done it during the week.
Either way, the market will sell off (unless we get QE3?!?). The politicians need to understand that their joke of an effort at "debt reform" is not fooling anyone. Real changes need to be made and they needed to be made yesterday. FIGURE IT OUT.
Interesting op-ed: http://www.guardian.co.uk/commentisfree/cifamerica/2011/aug/05/us-credi…
The problems absolutely persist, but the gloom-and-doom atmosphere that decimated the markets in '08 isn't quite the same today.
Downgrading the U.S. only serves as a temporary bump to the economy.
Seriously S&P fuck you. I had tomorrow off. Now EVERYONE will be here. Which means I have to be here. This was going to be my first saturday off...ever.
What do you do?
Fed basically just told S&P to eff off.
I'm shocked they actually followed through. Props to S&P.
Markets up on Monday or Tuesday. Calling it. I understand the implications of a downgrade, but give me a break these rating agencies had AAA ratings on subprime mortgage cdos, smart money will be buying the shit out of everything us little guys sell.
Want to put some money where your mouth is?
The smart money has forced the 10 year to down below 2.5%. The smart money start to sell-off early last month. Who's to say the smart ain't going to let this thing go down another 1000 pts before they step in. That's why it's the smart money.
The fact that stock and treasury and commodity cash in were converted to cash instead of being re-invested shows that this is probably right.
Fuck this. I dont know how the prick that had the final say at S&P sleeps at night.
NOBAMA 2012!
I don't see how it would really matter to the guy at S&P. I mean look a tit this way, if this prevents a future government default/collapse or their investors losing a ton of money they did the right thing. Hell, Japan was downgraded at a similar debt-to-GDP ratio.
MITT ROMNEY 2012
From ZH, lol
Peter Barnes “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
Geithner’s response: “No risk of that.”
“No risk?” Barnes asked.
“No risk,” Geithner said.
It's no secret S&P is staffed with complete retards and wall street rejects. They acknowledged to the Obama admin that they were off by $2 trillion but will stick with their assessment all the same. Hah!
So what does this mean?
Risk free rate in CAPM is no longer risk free. Draw your own conclusions.
There is 0.00% chance the US will default on its debt. We are no where even close to that point. The biggest threat to this country are the self-serving scumbag politicians in Congress.
No one one knows for sure, it's all speculation at this point but there will definitely be some very interesting developments over the next week.
Another thought - This just GREATLY, I mean GREATLY reduced Obama's chance of getting relected. Too bad because I thinks he genuinely wants to do the right thing for the people. oh well..
I guess the 4% tax rise on millionaires doesn't seem so bad now does it...
WOULDN'T HAVE DONE ANYTHING
Not for the downgrade risk in the short run, but in the long term it would only help if they had put a condition into the bill that any increase in tax revenue from the bill would go towards paying down the debt. Alas that did not happen.
I have money where my mouth is... Went long today after being in cash for the last few months. If I have to weather another 1000 point decline, I can endure it. I think august may be rough but post labor day we start moving up again. Just my opinion guys, not trying to pick fights you guys have just as much as a chance being right as I do haha. Good luck to everyone though, long or short.
Well I got to say you definitely have bigger balls then I do. I'm in the stick with cash and watch it all unfold camp.
But good luck to you too hope your bet pays off.
atm straddles for the win
I just feel bad for this guy: http://blogs.forbes.com/steveschaefer/2011/08/05/why-sp-wont-downgrade-…
[quote=Seigniorage]I just feel bad for this guy: http://blogs.forbes.com/steveschaefer/2011/08/05/why-sp-wont-downgrade-…]
He just pulled a Dick Bove.
Man you know a lot of political bullshit went into this one. First there were rumors all day and the market didn't really respond.. which makes me think they thought DC would be able to shove it under the rug.
Then Kudlow announces on his show 'Breaking News' that S&P is going to downgrade us. THEN shortly after he announces that we will not be downgraded and it was false. Finally after taking a nap I wakeup and we are officially AA.
I bet they could make a movie about what happened behind the scenes today.
BURY ALL CASH IN GROUND
What are the chances that Moodys and Fitch follow suit with a downgrade? My hunch is that there was tremendous political pressure from the administration to avoid a downgrade. However, I believe that there are incentives for S&P to downgrade U.S. debt.
It probably played out like a Korean drama.
S&P: "Sorry I fucked up on sub-prime mortgages baby. Look, I stood up to the easiest and sexiest piece of ass (the U.S.) I'm trustworthy, all my other ratings are legit, I'm not in bed with anyone else except you, the investor."
I don't think they are going to any time soon. Definitely expect to see multiple downgrades by S&P on other countries next week however.
The market will most likely sell off, but where the hell will the money go? into treasuries? the markets just don't make any fucking sense anymore
Cash
Cash? What cash? Reserve Primary Fund cash? Money market cash? Gotta remember your dollar bill is a Federal Reserve Note that used to be backed by gold, then by faith in US government, and now by faith in AA+ rating US government.
Next week the Euro will rise against the Dollar, China announced to back the Europeans in the current crisis. Now as S&P downgraded USA, they will shift US treasuries worth more than $100 billion into Euro. Chinese Foreign Exchange Minister said at a visit at Hungary, that China will help the Europeans through money supply.
bond yields give me the feeling investors are gonna look at the downgrade and think "so the fuck what", where else am I gonna put my cash?. Guess we'll find out, I'm basically to the point where I just wanna stop caring and watch the show!
I'm with you guys.
S&P is like the emo kid that cuts himself for attention
Here's the deal, Monday and for the next few weeks while people are actually doing the math to figure out the different valuations of fixed income assets and comparing durations of similarly rated bonds most will figure out that the 1 of 4 rating agency's have placed a AA+ rating on bonds that essentially have AAA fundamentals. There will be an initial spike in interest rates and some valuations but, the bond market will stabilize. After the word spreads money will shift to US treasuries because they will have higher interest rate with less risk. This will only go up so far because of the limited supply. Although there will be some "off the market" bonds that had previous AAA that originally get sold that someone will wish long term that hadn't taken the loss in the first place. Everyone remember cool hand make money. Panic loses your shirt. Also, durations and convexity doesn't change if the fundamentals are the same. (May not need QE3)
Shocking yes, surprising no.
Although we are now downgraded, the U.S. Dollar will continue to be the reserve currency of the world no matter some quants at S&P say. At least in the near term... Like others have pointed out, there simply is no other currency or debt that can compare with the U.S. Dollar regarding financial safety. With Europe in shambles and Asia dealing with either inconsistent business environment (China) and/or slowing economies, it's likely that the U.S. rate will not drop significantly, if at all.
If global economy wasn't in such bad shape, this downgrade would likely affect the U.S. in a much more pronounced manner that I predict. But then again, in the long run, we're all dead.
I'd get the CHF. But the fact is that cash will be better relative to treasuries since the price you bought them at will decline rapidly due to the increase in yields. Stocks will decline as well. So you can pull out, not lose money nominally, and reinvest later. In real terms the USD will decline in value, so if you want ot invest in say...the CHF you'd be better off.
That definitely is an option, and one that will likely be pursued to some extent. However, I'm fairly certain that the Swiss will not be issuing enough debt to step in as the world's piggy bank.
I also don't see the yields shooting up either. I really think we have to remember that most money managers will quickly realize (or already do) that the U.S. Treasury is the safest place to park their cash in the near term. Honestly, I'd be more concerned about trust obligations that corporations and pension funds have (which demand that they park their cash in AAA rated instruments, namely U.S. Treasuries) and also the threat of a negative real yield curve on the short term note.
This whole AAA downgrade by the S&P could mount to the equivalent of the Y2K scare. I hope that's the case...
Next week we´ll see S&P under 1.100 and DJIA under 11.000
@MMBinc
Yes, CHF is safe, I expect next week that China supports the EU with measures. The chinese will be shifting their FX reserves from Dollar into Euro (obviously more than $100 billion). The Eurozone is more important for China than US. I want to know how the PIMCO guys react...
EUR, CHF rise against Dollar
I really hope you're wrong.
I hope so too
What do you think China has been doing for the last year? Diversifying into the EU.. hope that works out for them.. (hint: it won't).
AUD/NZD/CHF are the places you should be looking for a "safe haven"- that's really in terms of FX, not sure how their equities/credit/govies are doing.
Good luck to everyone on Monday (Sunday night).
AUS Wine Real Estate.
Overall though, I think we need this jolt in the arm to get us thinking seriously about the debt. Politicians react when the stock market goes down or their approval ratings. Both are gonna happen here. If Congress can get a BBA to the states this will pass and be a great buying opportunity. If that doesn't happen and the debt isn't addressed, it will only be followed by other ratings agencies. I mean...almost all of the smaller ones have downgraded the US already. What is Moody's and Fitch missing?
Needless to say I'm gonna watch the market carefully to see when to sell my SPY puts. It's gonna open down, way down. And probably go sideways or recover a bit on Monday. The question is how we address is. The Fed and related institutions all blew it off because of the "$2 trillion calculation error". Well, $2tn on a debt projected to be like $17tn in 2013...it's not that big an error IMHO. (yes I realize its 10%)
Some intern probably typed in the wrong number.
Where's Eddie? I want to hear his thoughts on this, or at least see what his reaction is.
I just want to know...what does this mean for SA jobs?
Also, someone needs to kick Comrade Obama out of the office.
I really think Europe as a United States of Europe will start to look more realistic in the next few months and as that it will financially look stronger than America. However until than a common Euro zone Bond will help massively to control the crisis in Europe. USA on the other hand needs political will to look at ways of promoting growth in the short term and look at seriously cutting the deficit in the medium term and along with Europe start on much needed structural reforms for the long run, although Europe needs this need more and have rightly started already but still massively need labour marker reforms.
Just read this article: http://online.wsj.com/article/SB123780272456212885.html
What do you guys think about the China wanting to create a new currency??
Nonsense, I dont think the communist party will accept that, in China most people heading finance and state companies visited western universities, so they´re arent afraid of capitalism and money policies. But in the end the communists say often no to new currency reforms or openings of financial markets
The same thing in Russia, Medvedev announces reforms, more capitalism, more liberty and Putin says NO, fuck off, Dmitri, I´m the reigning ZAR...
I think it's a national security issue.
I also think it is a joke that China scolds the U.S. for taking on so much debt, but also depends on it to artificially deflate their currency.
I honestly think that's a good idea, something like the SDR which would take in to track different currencies, commodities to give something that will be not open to one government abusing it
HUNTSMAN 2012!!!
Shit news (horrendous actually) but pretty happy im long GLD and TBT calls!
Where is Obama on this? When is he going to make an announcement? The guy loves to be in front of the camera and take credit for virtually everything....
I want to hear what he says. I am sure it will go along the lines of "The Republicans held us hostage with their demands to save the super rich money, and this is the result". This guy needs to GTFO. He has absolutely NO business being in the White House. The cute little white guilt thing that played out in 2008 and got this guy elected needs to go the fuck away in 2012 or God help us.
Guys, Guys, Relax. Everyone voted for hope and change. Jeez.
We got our change, a fucking downgrade. You can thank that clown we call a president. The rating agencies sent a clear message that we needed to fix things. The Republicans fought long and hard for deeper cuts, but had to settle for this weak sauce agreement. Bam, we get a cut anyway.
This is what happens when you elect a black Jimmy Carter. Keep hoping.
Its quite funny that China wants the US to reduce their defense budget, that says everything about China.
I never trusted chinese people, they´re often greedy and egoistic. Japanese can be true friends, they´re honest and kind.
No offense Ted, but I personally know many Chinese (upper class) people who are very giving and trustworthy friends. Just like we don't want other nations basing their opinion of us by what our government does, we shouldn't do the same to other peoples. Especially the Chinese, where the government is almost completely autonomous from the people.
How can you hate a people that have give us shrimp toast.
I do not hate them, I cant trust them, maybe one day you´ll find out why and shrimps are great, but since "Katrina" and "Fukushima" I prefer meat...
We would do well to remember that these rating agencies are the same ones that issued a AAA rating to Lehmans just one month before Lehmans collapsed.
They utterly failed to monitor/predict the financial crash of 2007-2008. They should have been ignored, or better still, disbanded, and replaced by non-profit independent organizations to monitor the monster that the "free" markets have created.
NB, Lehmans paid their credit ratings agency for their assessment and their AAA rating. If we can't see a problem in that transaction, we're all fucked.
It doesn't matter whether they're right or wrong. It's purely symbolic.
I agree. But to comment its catastrophic is perhaps an overstatement. S&P's motivation and actual process to reach this conclusion is suspect. This combined with their previous escapades..
The Chinese have played the last decade or so brilliantly.
The US right wing market fundamentalists, bankers and idiots like Greenspan and Bush have lead an all too willing America down the path of its own decline.
But the Chinese have been right behind giving the US that extra push that was needed.
US companies want to destroy the power of organised labor? Well China is there to provide outsourced labor at slave wages and slave conditions to do it.
US banks want to get American citizens in debt up to their eyeballs to keep them as debt slaves for the rest of their life? Well China will lend them the money to do it, and send them the goods to spend their money on.
China is well on the way to overthrow US supremacy without a shot being fired. All China needed was the co-operation of the US companies, bankers and right wing billionaires to do it.
Lets hope this is a warning for the UK at least.
This is stupid and off-topic. There is a lot of slave talk here.
Tell me how US companies wanting to destroy organized labor provides an opportunity for cheap China labor??? You have it backwards.
What I was saying was with all the condemnation and judgement passed by China upon this news, they were complicit.
Do any of you guys realize that China owns a small percentage of the US's debt? Its something like 8%, a number that is far smaller than what talk radio or cable news would have you think...just something to keep in mind.
Its actually 46%. Pretty substantial if you ask me.
Not even close man.
http://www.guardian.co.uk/news/datablog/2011/jan/18/us-federal-deficit-…
They own less than a trillion USD, and our debt amount to something like 14 trillion.
About time. Monday will be loads of fun! YAY!
/sarcasm.
Well, at least you guys don't have to worry about the market until Monday.. I woke up to a 5.6% plunge on my country's exchange (Saudi Arabia). Our Saturday is your Monday by the way :\
Can't believe Johnny Boehner fucked it up again. If he just went for the 4 trillion cuts Obama proposed we would have been good. But hey what else can you expect from the modern republican party who is trying to sabotage Obama's re-election? Can't wait for the election in 2012 so all these tea baggers are out of office.
This comment is so wrong and stupid I can't believe it. Cap, Cut, and Balance had more cuts than anything the Dems proposed. The Tea Party is gonna gain mad seats in the next election. I guarantee it.
That isn't true, Obama proposed a plan in April that cut 4 trillion. Google it.
Who is excited for Monday! On a brighter note we did get Osama, USA, USA, USA!
Why isn't there more attention given to Bernanke and his role in all this? Forgive my ignorance but could someone educate me on where the buck stops, who is really responsible for monetary policy etc? I thought that the Fed had more say than the government in that regard?
government debt is fiscal policy. All the other stupid shit bernanke did caused other stuff but I do not remember him telling the US to run a 14 trillion+ debt.
Fair enough, thanks for clarifying.
I imagine Geithner will step down in the near future.
Hopefully all the people in the UK who constantly whinge and moan about the "ConDemNation" or how they've "ended up with a government that they didn't vote for" or who complain about the scale of public sector cuts will see this and finally see some sense...
No probably not, they'll keep on complaining about how the local library that they never used is going to be closed down or how they're having to work for 1 extra year.
Monday is going to be worse than we could imagine. Spiegel just reported that Germany thinks Italy is too big for EFSF. I'm no Dr. Doom but Thursday was nothing compared to what we'll see on Monday if this is true..
What a joke. Fucking Businessinsider. Yes blame Ron Paul, the only guy who truly understands wtf he is talking about.
http://www.businessinsider.com/ron-paul-tea-partiers-and-congress-did-t…
[quote=Nobama88]What a joke. Fucking Businessinsider. Yes blame Ron Paul, the only guy who truly understands wtf he is talking about.
http://www.businessinsider.com/ron-paul-tea-partiers-and-congress-did-t…]
Here is the thing, no one likes the Tea Party except the Tea Party. Every media outlet blames them for the gridlock in congress (which is true) including the generally conservative business press (Bloomberg, Economist, etc). The debt reduction plan that was passed was shitty compared to what was proposed in April (4 trillion in debt reduction which included small tax increases). When you are so ideologically stubborn that you cannot compromise then you do not belong in political office, end of story.
[quote=Nobama88]What a joke. Fucking Businessinsider. Yes blame Ron Paul, the only guy who truly understands wtf he is talking about.
http://www.businessinsider.com/ron-paul-tea-partiers-and-congress-did-t…]
Yeah, that makes sense lets default and fuck everyone over while we pull the military back to US shores so when the next war happens we can go broke from attacks on shipping and trade right before you fight the motherfuckers in your own neighborhood. He and his son are some of the dumbest people walking the Earth. Bet ya if we did get attacked neither of those pencil neck geeks wouldn't fight for this country.
Hey asshole, Ron Paul served in the USAF during Vietnam.
The Tea Party is the only reason Republicans pushed as hard for the cuts.
And THANK GOD for them.
And thats very sad, spending more could have had helped more than these cut and split programs. You can see it on Greece, the cutting measures kill the economy. They had nothing learned from 1929.
Are we back to "Greece failed because of austerity?" lol That is laughable. 1929 was not a time of cutting spending. There was little to cut. And when Hoover decided to react to the people's cry for money, it ade the economy spiral further out of control.
Which has been bad for the US overall in my opinion. I think what really needs to happen wasn't dealt with the budget at all, I think the plan should have been similar to what the Economist article below is calling for, A short term plan for growth followed by a medium term plan which will cut more deeply, tackle welfare bills and raise taxes. The Budget plan is just shite
http://www.economist.com/blogs/freeexchange/2011/08/debt-ceiling-deal
The rating agencies should really clarify their criteria for downgrading. With cases such as these that gain mainstream media coverage, its implied to us why such and such is downgraded. However, its not clear cut.
Perusing the below link highlights this. Every media source have universally claimed that USA are now ranked below the economies of France, UK, Germany, Canada and Australia. Yet, Australia is ranked a AA+ by Fitch and AAA by the other two.
Its too vague and subjective.
http://www.guardian.co.uk/news/datablog/2010/apr/30/credit-ratings-coun…
This makes me feel dirty.
I just opened a high yield savings account yesterday and loaded it up with cash
Effectively the same as burying it in the ground
To the capm model comment ( revolutionary, thank u) 1) risk free rate is a relative value concept not absolute. Credit risk in g10 sovereigns imo does not deal in absolutes it is a relative concept. While this may not be the case in the future currently usd deposits are still the most safe on a rel val basis. 2) everything is priced off treasury curves, hence debtholders will likely negotiate before any real drama occurs, looking to keep demand for their own exports well oiled 3) hidden assets. This isnt a distressed company with An upcoming maturity, no equity sponsors to fohble down, or no cash, cashlow burn, tapped out banklines, breaking covys, and all assets pledged away. Au contraire the hidden monetization optionality stemming from potential increases in taxation of several segments of the private sector needs to be considered as an additional waterfall of liquidity against anyreal concerns.
I would encourage all macro guys to put on their distressed guy hat on for a second, it will be much more informative for u at this stage in the game if u trade sovereign risk
well it was bound to happen..
It's ridiculous that the US gov would even try to play chicken with S&P. Just goes to show how arrogant these politicians are. Politicians feel they are above the law. That's the same reason why some of them and their staffers don't pay taxes, they think they are above it. Even when they get called out on it, they claim they didn't know. If they were that incompetent, then they shouldn't be structuring policies that are this important. They all try to live in the "here and now". They just want to get elected again, they don't care about anything else. But I guess politicians are above the law to some degree. How many politicians have used tax money to pay for prostitutes? You have to give them kudos, they have some serious brass balls.
S&P had to downgrade the US. Think about how much Europe has been complaining when the rating agencies downgraded Greece and portugal. All these other countries hate the US and US companies. They feel as though Moody's and S&P show favoritism to the US. If that trend were to continue, the rating agencies would lose all respect and then the EU or some other group would start a different rating agency, headquartered somewhere in the EU. These rating agencies have already lost a lot of respect in the past few years. They can't really afford another issue.
Personally, I think US should have been downgraded before that. If a company was kicking around the idea of defaulting and waiting till the last few days to decide if they were or not, they would have been dropped. There are some times when playing chicken doesn't pay off. But when it's all said and done, who's the tallest midget in the room? Everyone still needs somewhere to park their money.
I'm curious to see the ripple affect
The U.S. did not need to be downgraded. It is a healthy democratic system when there is ample debate. The fact that we cut the debt by $2 trillion over ten years and raised the debt ceiling in time to avoid default is proof enough that we are moving in the right direction. The U.S. government is not a nimble private company, nor should it act like one!
Moody's and Fitch are likely holding back their downgrades. The numbers say yes, their compassion for the U.S. and global economy says no... And that is perfectly respectable, their trying to save a future in the U.S. for their kids.
The exit opportunities for S&P employees in the U.S. just got cut big time.
Wow, the idiotic nature of your post is truly amazing, I'm guessing you've never actually worked in the markets.
Hope everyone is enjoying the change we wished for.
This is a good paradigm shift. It's not just --what can we promise to the masses to drive votes/power-- it is now --what can we afford to spend on to drive votes/power. Resource constraints drive choices to the highest risk adjusted returns on those treasury inflows. There has been a cukture shift in dc away from frivolous spend, and more one to help out in r&d, hybrid car grants, etc -- taking the capital intensivneness barrier to entry down a notch for many infrastruc related early stage projects that will be valuable for this nation.
With that said, i am quite unclear what the tea party's ultimate goal was. We default. Then what. Fine the pres looks bad... But seriously then what, you have to negotiate with all your debtholders obviously into putting together a repayment plan. Meaning you are giving the wheel to china. Lets not talk about global uncertainty, short temr funding problem and interim layoffs. i have seen entities downgraded and then upgraded once their liquidity was restored and long term prospects solidified, this may be the path.
Im a little concerned that various influential people in the business world support the tea party' posturing during this entire debacle, Supporting individuals who are showing a clear lack of understanding of basic economics, basic financial markets, basic negotiation strategy, and obviously common sense. It is not strategically intelligent to think only one step ahead you must think 20 steps ahead, and they clearly have no vision and no exit strat.
So enough of this bs.
They are a dangerous ideologically driven movement that the Republicans are now stuck with. A group that refuses to compromise to the point where they are willing to throw the country into default has no place in government.
Now that we have been downgraded they are screaming from the rooftops that this is Obama's fault and that it is a catastrophe, when a few weeks ago many of them were downplaying the significance of a default (let alone a downgrade). They skewer facts, are inconsistent with their rhetoric, and make sensationalist claims to hype up their (dwindling) supporters and to hurt Obama.
Anderson Cooper was interviewing the guy from S&P who claimed that the primary reasons for the downgrade was political gridlock, a refusal to compromise on new revenues, and a congress that refuses to separate the concept of an austerity package from the concept of a very routine rise in the debt ceiling. The Tea Party largely caused the political gridlock, they refused to compromise on new revenue, and they refused to vote for a debt ceiling rise if an austerity bill did not meet their deluded expectations. Now they have the balls to blame Obama for the downgrade, I am not a huge fan of the guy but these nut bags need to wake up.
Obama could of compromised and forgotten about additional taxes that really wouldn't solve the issue. When half the population takes what the other half make you have something fundamentally wrong.
The Tea Party only has a handful of congressmen who truly need to listen to them. They are just as radical and ideological as the far left.
We got downgraded because we did not do enough to curtail spending and set the country on the right course.
Obama knew the financial environment he was walking into, but all he could think about was Obamacare. He hasn't done anything he promised and has been the leader of this divisive bullshit. Why should republicans compromise at all since he was more than happy to force feed his policy when he could. In fact, this is the liberal MO. If you can't get your way just flee the state or blame everything on the rich.
Even if Obama wins a second term I think you will see Republicans win the Senate.
I personally hope to see more Tea Party influence. If it wasn't for them we would of increased spending and gotten a downgrade anyway.
Why should anyone "compromise" on new taxes. The government takes more than enough money from hard working people. This whole idea that If we just gave a crack head some more money, everything would be ok.
Newsflash, the retards in Washington have ZERO incentive to not spend money. Giving them more would do NOTHING.
Buffett and many other extremely wealthy individuals are propenents of raising taxes, and destroying many tax breaks, for high net worth individuals.
Believe me, I'm hard working and love money, but I also realize that anything over $200,000 a year is fluff. I am sure there are plenty of programs that could be cut too, but cutting (not making more efficient) programs like medicare, social security, and welfare should be a LAST resort. I'd like to see less Mercedes and Louis V on the street than see a poor old man go without healthcare or a starving homeless person. Not to mention, cutting social programs before raising tax for the rich is a sure way to create social unrest.
I disagree, $200,000 is peanuts in NYC. That being said, a 3-4% tax rise on any dollar earned over the $200,000 limit is so minimal that it will have no material effect on anyone's quality of life.
I can smell your fucking socialist stench through the internet. Who are you to say this? Why don't you give your money to that poor old man? Better yet, do you even give to charity or volunteer?
Here is the thing, you are still ideologically stuck in one place and don't understand the consequences of what you are proposing. You can kick and scream all you want about no new taxes, about how its theft, about how Obama is a socialist etc. The ratings agencies don't care what you believe, we have both a revenue and spending problem and because you guys categorically refuse to address one side of the issue its making everyone nervous, including the people who can downgrade our debt and drive up funding costs for people in the real economy.
Obama had the balls to send the navy seals to kill osama, now he must have the balls to send the SAD for S&P...
http://en.wikipedia.org/wiki/Special_Activities_Division
These guys are very famous and efficient
If those high income individuals feel so strongly their their money would be used better by the government than by themselves, donating directly, then let them hand it over. I could care less what a handful of people think.
Who do you think is paying the taxes in this country? Income tax is progressive. If you spend a lot you pay a lot of sales tax. We have luxury tax. Rich go to private schools and still pay property tax (on very expensive property also).
Just because someone wouldn't miss a million bucks does not mean it is right. How many middle class people have two cars when the poor have none. Wouldn't it make sense to take one car and give it to a poor person. I mean the person with two cars isn't going to miss one car like the poor person will miss not having one.
Life is not fair. Oh well. If you think taxing the piss out of the rich is going to do anything, go right ahead. Punish the smartest and hardest working in this country for the benefit of the non producers. We will become the land of limited opportunity.
People are free to make any decision they want. All I ask is that they live with those decisions.
The problem is I agree with you as well. The balance is very hard to find; and it's not really about us fighting ourselves but more about us fighting the world.
The S&P may be doing their jobs (some would say), but I think that Fitch and Moody's isn't downgrading because they understand the issues at hand, how difficult they are to deal with, and their pricing in a little qualitative data called "hope".
*Disclaimer: The use of the word "hope" in no way affiliates me with Obama, Obamacare, or socialism. Any attempts to flame will be ignored.
In Europe these so called Ultra High Net Worth Inviduals, upt to $100 million wealth pay taxes up to 60% on income. There are ways to avoid taxes, but compared to US, Europe is no tax haven.
Capital Gain Tax of 15% in NY, thats amazing compared to France (40%) or Germany (30%), even Switzerland claims 30% of capital gains.
I have a really hard time supporting more capital gains tax, considering it is in direct causation with domestic investment.
If you want to increase revenue you do it across the base. You eliminate marriage credits, credit for children, mortgage rate deductibility, etc. Stop trying to influence the market and private lives.
Or you could cut the budget more and more. SP would of been fine if we cut 3-4-5 trillion. But instead we only cut a small amount.
Take a chainsaw to the budget. So sick and tired of the poor hand of uncle Sam always outreached. Keep asking for money and keep pissing it away. No where in this discussion did I see the president say that all increased tax revenue will only be applied to the deficit and we will cut the rest of the budget severely. Any increase would of been used for more social programs and never applied to the deficit. When the economy rebounds the tax increases would stay and the deficit would be quickly forgotten.
Welcome to America. The land where other people decide what is going to effect your qualifty of life and if they think it won't matter, they will take what you have earned.
Hard work and reward are only allowed within the framework of what the government thinks you need.
I would only support a tax increase is there was a bill passed that said any increase in revenue could only be used for deficit reduction.
Until that happens we all know the money will go into the general obligation fund and be lost.
How buffet could suggest paying more in taxes is beyond me. He has done more good and directly helped more people with his money than the government would have done.if he cares so much he should self fund some public schools or pay for road repairs himself.
Why on earth would we want to be like Europe. Please do not bring up European tax policy in this thread.
Sorry
The current situation is more than dangerous, now we need to talk about higher taxation. Looking to next week, I see nothing positive, the euro crisis seems to be solved, China wants to back Italy and Spain, investing their reserves there, they´re not seeing higher risks in Italy and Spain than in US.
http://www.reuters.com/article/2011/08/04/italy-cenbank-tremonti-idUSLD…
I feel great anger, when I hear that politicians blame the banking industry for their mistakes. Never understand why they cancelled Glass Steagall Act. I hope for all of you that 2011 still becomes a "good" year.
Yeah... Europe's tax policies are working out well. Hmmm...what is the most successful country economically in Europe right now... Switzerland? Individual income tax rates are capped between 12 and 32% depending on which canton you live it. On the other hand, look at Italy, realize what programs Berlusconi is rolling back now? All the ones that the socialists/Democrat/Obama wants!
Not Switzerland, its Luxembourg. Income per head is just about $120.000, they have low unemployment and a great education and health system. And Berlusconi is no socialist, the political party he founded is quite stronger in views than the republicans. In Italy there was a socialist president, called Romano Prodi, that was 2008.
I'm not saying Berlusconi is a Socialist. Just saying all the shit thats being rolled back is.
Switzerland is probably the best run country in the world, however it has basically no military expenditure, no poverty, no immigration from underdeveloped countries, and happily and proudly protects the wealth of the super rich (no matter how it was made). They are a very unusual case.
Lol dude, if you like Switzerland, you should vote Republican...
So minimal military expenditure, conscription, private/public hybrid healthcare, a strong welfare state, and pro business? That doesn't sound bad to me, not sure how much of this supports Republican policies though.
I'm for minimal military expenditure (as are true conservatives, like Ron Paul for one). Conscription is bad, but it's not a big deal there, they don't actually do anything with it. Don't know enough about the specifics of their healthcare, but I'm guessing they have a minimal safety net and some sort of option for private insurance (that's not what Dems want, btw). They don't have a "strong welfare state". The government should provide some services to the less fortunate, but there's a difference between doing that in a fiscally responsible way, and bankrupting yourself. In my view, only one party wants to do this in a fiscally responsible way (and Switzerland does NOT have high tax rates, so don't give me that crap about taxes instead of spending being the problem). Pro business, no need to expand on that.
http://brokershandsontheirfacesblog.tumblr.com/
Asia Markets Open -
Gold $1692
WOOOOOO!
Yeah, a country twice the size of Massachusetts with almost none of the problems the US has , is a fair comparison.
that was my point...
Buffett doesn't care because he is taxed on long term capital gains. And 4 more percent taken off when you're already paying 45ish is closer to a ten percent cut in your post tax income btw... And yes 200k isn't shit in NYC. I'm probably going to make a shitload trading tomorrow's open but I'll still feel like a poor motherfucker using coupons on everything. In fact I have one of those entertainment books and I'm using a coupon from that to buy munchkins for my desk tomorrow.
I also like all the shit throwing going on when people should be plotting their new career moves and survival skills if things hit the shitter once again.
We need more revs. End of story. Any and all ideological bs needs to take a backseat. We need to do a hard analysis of which potential new cash sources (taxes) would hurt less in the context of the macroeconomy, purely to stabilize the liquidity position of this nation. If you dont want to help bolster the liquidity of this country then your interests are misguided. This is not a game or a polisci class.
No new revenues without something attached to them making them only available for paying down deficit/debt. End of story.
Gold $1710 3,2 percent up, thats a record jump
I cant fall asleep...
Yea I'm watching Bloomberg today is going to be exciting for sure
Negative outlook for brent and WTI, Im going short, i see brent under $100
But Gold is highly overestimated
The biggest problem with taxes it does not take into living expense, Taxes should correlate with living expenses...
Also can Gov't heads stop using Keynesian economics, it has worked thus far, has it?
http://www.bloomberg.com/news/2011-08-08/s-p-seen-surrendering-to-tea-p…
Im shorting BoA since the 8,5 billion MBS lawsuit, its amazing that BoA plunged more than 10 percent, us banks are really done. Also in Europe bank share are dropping heavy, SocGen and RBC, also plunged more than 10%
Maybe John Paulson and David Tepper will return to their 2008 strategy...
MS down 13%
Since March 2011 SocGen lost 50% (March €50, today €25)
And NASDAQ100 tends to sink under 2000 points
BAC ----> Pennystock
Downgrading U.S. Government Debt doesn´t imply the U.S. crisis itself. It is just a sign that the U.S. government needs an acceptable solution.
I can understand the panic, but believe me: It is way too overrated what media report and show us every day.
(Corporate) America is strong enough to get rid of the current crisis. U.S. only need an arrangement from Republican and Democratic.
S&P did the right thing.
http://www.bloomberg.com/news/2011-08-09/fed-to-keep-rates-at-record-lo…
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