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LTKoblinsky

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S&P lowers US outlook
« on: April 19, 2011, 09:34:45 AM »

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Treasury officials “believe S.& P.’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” an assistant secretary for financial markets, Mary J. Miller, said in a statement.

There's a lot more passive aggresive comments by 'officials' about the S&P's reports. Does anybody else get the feeling that being so close to government regulators has some effect on the rating firms' outlook?
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Turd Ferguson

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Re: S&P lowers US outlook
« Reply #1 on: April 19, 2011, 11:06:28 AM »

Are you saying the S&P is painting the picture of a 5 inch "shit sandwich" as opposed to a foot-long because of Treasury "requests", and that its actually worse than they are portraying?

If thats what you're saying, I'd tend to agree.

I delivered pizza when I was 17 and all us delivery guys knew the place was about to go under because we were so close to the situation. Yeah, a bunch of teenagers knew more than the banks who financed them knew. Pretty sad.
« Last Edit: April 19, 2011, 11:13:44 AM by quickmike »
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LTKoblinsky

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Re: S&P lowers US outlook
« Reply #2 on: April 19, 2011, 11:47:41 AM »

Speaking of treasury, I also read in a separate article that China is struggling with inflation right now because they don't have an awesome leader like Bernanke with a 'hand on the lever' of the economy.
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LTKoblinsky

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Re: S&P lowers US outlook
« Reply #3 on: April 29, 2011, 02:15:29 PM »

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The Washington Post recently reported that the White House and the Treasury Department put tremendous pressure on S&P not to do this.

No suprise there...
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sillyperson

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Re: S&P lowers US outlook
« Reply #4 on: April 29, 2011, 05:06:39 PM »

I did a rant about this and other impending D2Z signs, for this week's Capitol Access.

http://nhcaptv.com/episode/161

Bill Brasky

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Re: S&P lowers US outlook
« Reply #5 on: April 30, 2011, 11:13:28 PM »

Quote
The Washington Post recently reported that the White House and the Treasury Department put tremendous pressure on S&P not to do this.

No suprise there...


Look.  To properly appreciate the Credit Outlook Downgrade from S+P, it needs to be understood on the surface.  And then what it actually means, below the waterline.  

So, first, understand that the Executive Branch is at war with Big Business, which is commonly regarded to be the "Fourth Branch" of the USG.  This is the level at which individuals of huge wealth moves between governmental positions and the private sector.  

Like, why do big executives move between positions that pay fifty million a year, to a position that pays a hundred grand?  This is exactly why.  Power and influence, and to protect the monied interests of their counterparts.  They take a hit for the team, and go inside the machine for a few years.  From there, they influence "stuff", like tax laws and subsidies, and legislation.  And then they leave, go back to private, and reap the rewards.

Outside the sphere of government, these same interests are represented by lobbyist organs.  Big Tobacco, Big Pharma, Big Oil, Big Finance, Big Telecom.  

Another of these lobby organs is the Business Roundtable. The word "roundtable" suggests that there is not one sector, but a number of individual businesses, being represented.  

The Chairman of the Roundtable is Harold McGraw.  Harold McGraw is the President and CEO of McGraw-Hill.  You probably know McGraw-Hill as a schoolbook publisher.  But they do a lot more than that.

McGraw-Hill also owns Standard and Poor.  

Did the lightbulb go on yet?

Six months (appx) ago, the White House conducted what was reported as "roundtable meetings" with big business CEO's.  Pepsi was there.  Verizon.  Proctor & Gamble.  Big Banks.  

But they weren't actually roundtable meetings.  They were Roundtable Meetings.  See the distinction?  

The Roundtable Meetings were conducted between the Third and Fourth branch.  The questions were "What can we do to get Big Business rolling again, and hiring, and borrowing?"  

The answer was "Stop imposing draconian business laws, high corporate taxes, and high taxes on persons of large wealth."  There was talk of imposing sanctions and compensation limitations of CEO's and other big-title positions of publicly traded companies.  The CEO's are vehemently opposed to these sanctions on compensation.  They do not want to run these monolithic corporations for a mere bag of shells, and then be taxed 40% of it.  

The meetings were regarded as a flop.  The 3rd and 4th Branch left the meetings equally grim-faced.  The public portrayal from both sides was "The negotiations are on-going, and we've made some progress on several points."  Which means, there wasn't a whole lot of back-patting going on.  There were no cameras present, inside, during the talks.  

And, to my knowledge, they never reached any conclusions.  They never had further meetings.  This, my friends, is an ominous sign.  

---

So...  six months later, here we are.  

The Fourth Branch is sending a direct message to Obama, in clear-channel.  We all heard it.  But what does it actually mean?

It (the S+P outlook downgrade) says, if the economy continues in this exact manner, S+P will downgrade the credit rating from AAA to a lesser grade.  

Obama says, "The economy is in the process of changing, we're ending QE2 in June, and..."

S+P says, "No, you fucking moron.  OUR economy.  The Business Roundtable, remember?"

Obama says, "My advisory board tells me, if the credit is ACTUALLY downgraded, we could experience another recesson.  The bond vigilantes will go nuts, crush the markets, and it could have devastating consequences.  Our debt will implode, and it will have a global impact of unimaginable proportions."

S+P says, "Exactly."

Obama says, "That would be bad for all of us."

S+P says, "Not really.  Mostly, just you.  And "main street".

Obama says, "Oh."

S+P says, "Also, you know, WE ARE the bond vigilantes."

Obama says "Yes, but...  This is the 'nuclear option', and you're saying you'll use it?  This is financial Armageddon."

S+P says, "Call it what you like.  Certain unnamed members of the Roundtable, "friends of ours" if you will, have decided enough is enough.  Your requests to quash the downgrade statement are declined.  The economic collapse, if one is orchestrated, will be blamed on the conditions of the downgrade, and that means YOU, this time, not US.  This discussion is over".


--

Of course, that actual convo never happened.  But that is the message.  These things have covert meaning beyond their public meaning.  There is a great deal of symbolism in the way the markets work.  Powerful men from generational fortune families.  Educated, ruthless, and shrewd.  They send messages like smoke signals through the market behavior.  Approval and disapproval can be clearly witnessed on a variety of political issues.  The sell-off's and rallies are like the judges gavel falling, and the fish follow the whales.  

And, it needs to be said, the Roundtable doesn't represent the wishes of ALL American business.  In fact, it wouldn't surprise me if 90% of those companies CEO's are non-participants, because there are always cabals inside of enclaves.  

The ball is now back in Obama's court.  He can play hardball or softball.  He can stick to his guns about meddling in business, or move to the center for a softer approach.  If he bends, they'll bend.  If he won't, they'll drop the hammer, smash the economy to pieces, and damage his chances for a second term.  

So, to crystallize this statement, and confirm the unsaid...  what you may be about to witness is basically, John Galt.  A few big movers, a few big moves.  Except, in the real world, Galt is a massive, monumental Hydra.  And I'm not quite certain Obama has managed to wrap his brain around the entirety of the concept.  

I'd rather they didn't, but we'll see.

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sillyperson

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Re: S&P lowers US outlook
« Reply #6 on: May 01, 2011, 04:34:02 AM »

Said it before, say it again: Drifter should have a financial podcast.
This is great stuff

Diogenes The Cynic

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Re: S&P lowers US outlook
« Reply #7 on: May 01, 2011, 05:45:31 AM »

I assume this raises the amount of money the government has to pay to borrow the money it prints.
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Riddler

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Re: S&P lowers US outlook
« Reply #8 on: May 01, 2011, 06:27:47 AM »

in a nutshell:
HNIC (obama) is in way over his head....
deer-in-the-headlites
above his paygrade
shit-in-one-hand + shinola-in-the-other = confusion
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Branlin

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Re: S&P lowers US outlook
« Reply #9 on: May 01, 2011, 07:43:29 AM »

Quote
Treasury officials “believe S.& P.’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” an assistant secretary for financial markets, Mary J. Miller, said in a statement.

There's a lot more passive aggresive comments by 'officials' about the S&P's reports. Does anybody else get the feeling that being so close to government regulators has some effect on the rating firms' outlook?

Aren't these the same ratings agencies that painted a "Rosy Scenario" in 2007? And refused to investigate Bernie Madoff despite having evidence dropped right into their lap?

Haha! Sure, they've got a lot of credibility.
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Branlin

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Re: S&P lowers US outlook
« Reply #10 on: May 01, 2011, 07:50:57 AM »

I assume this raises the amount of money the government has to pay to borrow the money it prints.

As I understand it, they can print forever as long as they don't run out of paper or ink. (actually, most of it is done electronically).

But to get people, institutions, or foreign governments to buy debt (Treasury securities), yes, they will have to offer higher interest rates because they are now viewed as having some level of risk. For as long as I can remember, US debt was considered to be pretty much risk-free. But no more.

In June the Fed will stop buying Treasuries (QE2) with monopoly money, and they will have to be sold on the open market. According to theory, which seems pretty sound, interest rates will begin ticking up.
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Turd Ferguson

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Re: S&P lowers US outlook
« Reply #11 on: May 01, 2011, 09:42:57 AM »

The fed wont stop buying treasuries. They cant. They might not call it QE3, but they will shuffle paperwork around and the end result will be the same as them buying the treasuries directly. If the interest they paid on the debt even went to 6 or 7%....... fuck. Getting real close to default time right then and there.

If they dont do QE3, its a quick ride to the bottom. If they do, its more drawn out, but the crash is much bigger later on. I see this situation as being bigger than simply fixing the business climate in this country. Massive cuts in spending across the board are needed to get this under control and to show other countries buying our debt that we are serious about kicking our habit. Lots and lots of pain for a lot of people no matter what happens.
« Last Edit: May 01, 2011, 10:15:51 AM by quickmike »
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Branlin

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Re: S&P lowers US outlook
« Reply #12 on: May 01, 2011, 10:44:55 AM »

The fed wont stop buying treasuries. They cant. They might not call it QE3, but they will shuffle paperwork around and the end result will be the same as them buying the treasuries directly. If the interest they paid on the debt even went to 6 or 7%....... fuck. Getting real close to default time right then and there.

If they dont do QE3, its a quick ride to the bottom. If they do, its more drawn out, but the crash is much bigger later on. I see this situation as being bigger than simply fixing the business climate in this country. Massive cuts in spending across the board are needed to get this under control and to show other countries buying our debt that we are serious about kicking our habit. Lots and lots of pain for a lot of people no matter what happens.

Yes, yer probably right about the paper-shuffling. That's their job, and they're quite good at it.

The average life of fiat currencies is 25 years and ours is 40 years old, so we're on borrowed time, it seems to me. Being the global reserve currency, when the dollar goes so will all others, because they're all tied to the dollar, making them fiat too.

The destruction of the dollar would shake the foundations of the planet it would seem. Although several countries are already moving away from the dollar and I would expect many more to do it before calamity hits, Americans will get it shoved up their ass by our wonderful government yet again. But it's all just idle speculation, we will have to wait and see.
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Level 20 Anklebiter

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Re: S&P lowers US outlook
« Reply #13 on: May 02, 2011, 04:04:07 PM »

Quote
The Washington Post recently reported that the White House and the Treasury Department put tremendous pressure on S&P not to do this.

No suprise there...


Look.  To properly appreciate the Credit Outlook Downgrade from S+P, it needs to be understood on the surface.  And then what it actually means, below the waterline.  

So, first, understand that the Executive Branch is at war with Big Business, which is commonly regarded to be the "Fourth Branch" of the USG.  This is the level at which individuals of huge wealth moves between governmental positions and the private sector.  

Like, why do big executives move between positions that pay fifty million a year, to a position that pays a hundred grand?  This is exactly why.  Power and influence, and to protect the monied interests of their counterparts.  They take a hit for the team, and go inside the machine for a few years.  From there, they influence "stuff", like tax laws and subsidies, and legislation.  And then they leave, go back to private, and reap the rewards.

Outside the sphere of government, these same interests are represented by lobbyist organs.  Big Tobacco, Big Pharma, Big Oil, Big Finance, Big Telecom.  

Another of these lobby organs is the Business Roundtable. The word "roundtable" suggests that there is not one sector, but a number of individual businesses, being represented.  

The Chairman of the Roundtable is Harold McGraw.  Harold McGraw is the President and CEO of McGraw-Hill.  You probably know McGraw-Hill as a schoolbook publisher.  But they do a lot more than that.

McGraw-Hill also owns Standard and Poor.  

Did the lightbulb go on yet?

Six months (appx) ago, the White House conducted what was reported as "roundtable meetings" with big business CEO's.  Pepsi was there.  Verizon.  Proctor & Gamble.  Big Banks.  

But they weren't actually roundtable meetings.  They were Roundtable Meetings.  See the distinction?  

The Roundtable Meetings were conducted between the Third and Fourth branch.  The questions were "What can we do to get Big Business rolling again, and hiring, and borrowing?"  

The answer was "Stop imposing draconian business laws, high corporate taxes, and high taxes on persons of large wealth."  There was talk of imposing sanctions and compensation limitations of CEO's and other big-title positions of publicly traded companies.  The CEO's are vehemently opposed to these sanctions on compensation.  They do not want to run these monolithic corporations for a mere bag of shells, and then be taxed 40% of it.  

The meetings were regarded as a flop.  The 3rd and 4th Branch left the meetings equally grim-faced.  The public portrayal from both sides was "The negotiations are on-going, and we've made some progress on several points."  Which means, there wasn't a whole lot of back-patting going on.  There were no cameras present, inside, during the talks.  

And, to my knowledge, they never reached any conclusions.  They never had further meetings.  This, my friends, is an ominous sign.  

---

So...  six months later, here we are.  

The Fourth Branch is sending a direct message to Obama, in clear-channel.  We all heard it.  But what does it actually mean?

It (the S+P outlook downgrade) says, if the economy continues in this exact manner, S+P will downgrade the credit rating from AAA to a lesser grade.  

Obama says, "The economy is in the process of changing, we're ending QE2 in June, and..."

S+P says, "No, you fucking moron.  OUR economy.  The Business Roundtable, remember?"

Obama says, "My advisory board tells me, if the credit is ACTUALLY downgraded, we could experience another recesson.  The bond vigilantes will go nuts, crush the markets, and it could have devastating consequences.  Our debt will implode, and it will have a global impact of unimaginable proportions."

S+P says, "Exactly."

Obama says, "That would be bad for all of us."

S+P says, "Not really.  Mostly, just you.  And "main street".

Obama says, "Oh."

S+P says, "Also, you know, WE ARE the bond vigilantes."

Obama says "Yes, but...  This is the 'nuclear option', and you're saying you'll use it?  This is financial Armageddon."

S+P says, "Call it what you like.  Certain unnamed members of the Roundtable, "friends of ours" if you will, have decided enough is enough.  Your requests to quash the downgrade statement are declined.  The economic collapse, if one is orchestrated, will be blamed on the conditions of the downgrade, and that means YOU, this time, not US.  This discussion is over".


--

Of course, that actual convo never happened.  But that is the message.  These things have covert meaning beyond their public meaning.  There is a great deal of symbolism in the way the markets work.  Powerful men from generational fortune families.  Educated, ruthless, and shrewd.  They send messages like smoke signals through the market behavior.  Approval and disapproval can be clearly witnessed on a variety of political issues.  The sell-off's and rallies are like the judges gavel falling, and the fish follow the whales.  

And, it needs to be said, the Roundtable doesn't represent the wishes of ALL American business.  In fact, it wouldn't surprise me if 90% of those companies CEO's are non-participants, because there are always cabals inside of enclaves.  

The ball is now back in Obama's court.  He can play hardball or softball.  He can stick to his guns about meddling in business, or move to the center for a softer approach.  If he bends, they'll bend.  If he won't, they'll drop the hammer, smash the economy to pieces, and damage his chances for a second term.  

So, to crystallize this statement, and confirm the unsaid...  what you may be about to witness is basically, John Galt.  A few big movers, a few big moves.  Except, in the real world, Galt is a massive, monumental Hydra.  And I'm not quite certain Obama has managed to wrap his brain around the entirety of the concept.  

I'd rather they didn't, but we'll see.



You and Jeff Riggenbach ought to get together to work on a financial history of a set of market panics in contrast to their modern counterparts. I'm serious about that, btw.
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