U.S. loses AAA credit rating from S&P.

the markets had priced it in and then as the day went on, equities rallied off the fact that the rumor hadn't gained more steam in the afternoon trading session. Look at the fluctuation of the s&p chart right after payrolls came out and then after the rumor leaked....then after it was revealed that it was "unsubstantiated",equities rallied again before retracing their early morning movement. On one hand, Watch the throne drops on monday, on the other, I might lose enough money to buy 100 copies of watch the throne as my sell orders i placed tonight are executed at the market open.
 
psk2310
[-]
Posted: 08/05/11 11:50 PM
This essentially means it will cost the U.S. more (proly significantly more) to borrow money. It will also have a cascading negative effect on an already poor U.S. economy. The extent of how negative this will be has yet to be determined. I forget who said this earlier in the thread, but if anyone has a significant amount of money in the stock market it would be wise to sell off now because the market will crash again.


I said it but technically, it would have been wiser to sell a week ago before the debt ceiling deliberation weekend. I was telling everyone that I was thinking about taking my money out but was too greedy for my own good because I thought there was no way that the debt ceiling didn't get raised. It's probably a good time to short certain stocks that follow the s&p and/or buy some VIX funds since the stock market will be up and down. The current market environment is one where rumors and tweets can move the market. if you have the patience, you can profit off of this but i'd probably just keep my cash in it's most liquid form....straight cash homey.  It took us 1-2 months to go from 12,000 to 8,000 in 2008 and took all of 3 years to get back to 12,000.  It took 5 days to go from 12.5k to 10.5k.....it's a trendline so that means look for the bottom (somewhere close to 8,000-9,000) and then get back into the market
 
conservatives are jumping for joy

borderline treason what they been doing with all the obstructionism.

And the president and democrats are straight push overs. Obama going in the jimmy carter direction.
 
whats will happen/// is next on the news, a government "agency" will "find" a lost USA or pre-usa treasure... and store the "gold" or whatever it is, into Fort Knox..... then the US economy will be "fine" ....
 
What up pchen83. I agree, selling a week ago would've been smarter. I'd be afraid of trying to trend the bottom. There are so many factors at play here. I don't know....My head hurts thinking about it...
 
Long over due.

Many suspected it would come after the debt ceiling resolution. Lot of it is already priced into the market. However, I firmly believe you'll see another sell off on Monday.
 
This news made me think of a story about two years ago. What if the US lost control of our monetary supply? We (the US) have issued trillions of dollars in debt. What if the countries that bought our debt lost faith in the dollar & sold off?

There were 2 Japanese men (employees of the Japanese Finance Ministry) arrested in Italy in April 2009 & they had a suit case with a hidden compartment that had $134 billion in US bonds. Yes $134 BILLION. They were trying to smuggle them into Switzerland.

It was pressummed they were going to sell them off because they lost faith in the US government & our ability to pay our depts so Japan wanted to sell these bonds at a "discount" price hoping to recoup some money before the US economy tanked.

They had 249 certificates worth $500 million each and 10 Kennedy bonds worth $1 billion each. $1 BILLION.

I always wondered why this story basically got swept under the rug. The odds these were counterfiet are nil too.

There are a lot of things behind the scenes that none of us are prevy too. Be careful with your money.

http://www.bloomberg.com/...ive&sid=a62_boqkurbI
 
S&P really doesn't mean anything these days seeing that China doesn't even have a rating......
 
This whole system stinks to high heaven.

I'm beginning to just say F it and not care anymore. No one seems to know what to do. The whole world is looking bleak right now.

These wars screwed us big time. Sending millions if not billions a day adds up fast.
 
The S&P should rate themselves while they're at it. I'd suggest "junk" but that would be too obvious. 

On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?

Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.

More than that, everything I’ve heard about S&P’s demands suggests that it’s talking nonsense about the US fiscal situation. The agency has suggested that the downgrade depended on the size of agreed deficit reduction over the next decade, with $4 trillion apparently the magic number. Yet US solvency depends hardly at all on what happens in the near or even medium term: an extra trillion in debt adds only a fraction of a percent of GDP to future interest costs, so a couple of trillion more or less barely signifies in the long term. What matters is the longer-term prospect, which in turn mainly depends on health care costs.
  1. So what was S&P even talking about? Presumably they had some theory that restraint now is an indicator of the future — but there’s no good reason to believe that theory, and for sure S&P has no authority to make that kind of vague political judgment.
In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.

So this is an outrage — not because America is A-OK, but because these people are in no position to pass judgment.
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-via NYT blog by P. Krugman

I honestly can't believe the gall of this two-bit agency to make this move in the midst global economic turmoil. So needless - everyone knows that the US, by being a sovereign currency issuer that doesn't peg its currency, literally can't default. This isn't a market issue as much as it is a political one, otherwise government bond yields would have jumped in anticipation of this event. 

Now we get to enjoy watching the Republicans and Democrats play the blame game over whose fault it was that the US got downgraded by this moronic agency, while the former barely tries to contain their glee at the belief that Obama's re-election bid is permanently damaged.  And as always, nothing of significance will actually get done.  
 
S&P is not some rogue, independent agency that gives out ratings as some stochastic impulse. They are part of the financial cartel network which is on the same page as the fed, gs, chase, moody's etc. This was deliberately orchestrated and obviously there is some strategy behind this against the backdrop of some larger picture which we do not have the privilege to see. Any insider to this info could have benefited greatly knowing it in advance, and perhaps some of it got leaked, resulting in the volatileness of the market in the past few days. 
 
Anyone in here pretending to know what's REALLY going on = a commode that's filled to the brim.
 
Apparently Apple has more liquid cash than the USA right now.

I believe Apple has 76 Billion and the USA has 74 Billion.
 
This doesn't materially change much.

I doubt our creditors our ignorant about our fiscal and monetary situation.
[h1]
[h1]US downgrade to hit repo agreements most[/h1]
Fri, Aug 5 2011

By Aimee Donnellan

LONDON, Aug 5 (IFR) - Certain Asian and European investors may have to turn to alternative Triple A rated assets while repo agreements might be hurt if S&P cuts the US's rating.

US politicians finally agreed to raise the debt ceiling earlier this week. However, there is still a possibility that the country's Triple A rating could be downgraded by S&P which has yet to opine.

Moody's this week confirmed the US Triple A rating but put it on negative outlook, while Fitch has yet to conclude its review. It is expected to do so by the end of the month and has not ruled out changing the outlook to negative.

According to JP Morgan the biggest impact of a US downgrade will be on tri-party agreements in Europe and the US repo market.

Certain tri-party agreements have strict ratings requirements which would result in US Treasuries no longer being accepted as collateral.

"This would affect around EUR90bn of repos with US collateral in place in Europe," said Nikolaos Panigirtzoglou, an analyst at JP Morgan.

Although there is no mention of ratings restrictions in tri-party agreements in the US, in Europe tri-party agreements are classified first by rating, then by issuer and then by country.

"If the US sovereign were no longer rated Triple A, US Treasuries would not be eligible anymore. This would affect around EUR90bn of repos currently in place in Europe (or 3.1% of the EUR3trn European repo universe).

The JP Morgan did add however that while a downgrade would not affect the eligibility of US Treasuries as collateral in US repo agreements, there was a risk for a haircut increase.

"If the haircut had to increase from 2% to 3%, repo borrowers would have to fund an additional USD30bn via other sources," Panigirtzoglou wrote. "This is a rather small amount. But it can become more problematic if haircuts rise by more or if volumes start shrinking as money market funds or repo investors retrench."

LIMITED FORCED SELLING

Meanwhile, market analysts believe that there would be very limited forced selling by domestic investors as a result of a downgrade.

US pension funds and companies have a certain amount of flexibility regarding the sale of downgraded debt and would likely be reluctant sellers of their own sovereign.

The number of investors that are restricted to by Triple A mandates is minimal. Expectations are that around USD40bn could be pulled from US Treasuries as a result of force selling.

"An upper bound of around USD40bn of possible forced selling is minute compared to the USD10trn of tradable US government bond," said Panigirtzoglou.

"At the moment US pension funds and insurance companies seem to have flexibility regarding the sale of downgraded debt so they are likely be loyal and patriotic about investing in their own sovereign," said a commercial paper trader.

FOREIGN EXIT

However, while the impact on many investors is thought minimal, the past week has seen a total of USD30bn being pulled from the US Treasury market and more is expected in the coming months as investors take out their holdings.

According to the JP Morgan research note, "US money market funds would not be required to sell US Treasury Securities in the event of a US downgrade, it is investor redemptions that pose most risk. Government money market funds are mostly at risk of losing their Triple A rating in the event of a US downgrade as they have no other investment alternatives."

Meanwhile, a European CP trader said that a downgrade of the US would have a profound effect on money managers that focus on the US. According to him and other CP traders, investors that have Triple A ratings restrictions include European pension funds, asset managers, private banks, bank treasuries and Asian central banks.

"Many US investors will remain loyal and patriotic to Treasuries but for European and Asian investors they will be looking for alternatives," he said.

As it stands 26% of the USD1.7trn US Treasury market comes from money market funds that typically look for ultra safe investments. Meanwhile, foreign central banks who hold around USD3.5trn of US Treasury securities are already seeking alternatives to US Treasuries.

So what are they? According to commercial paper traders, Treasury investors have already begun to look at Australia, Denmark and other European sovereigns that have their Triple A status intact.

"In the current market, Australian paper can offer a pick-up of 10bp-12bp over US Treasuries for one-month paper, German paper 10bp, Austrian 10bp-12bp and Danish paper 8bp," said a banker.

"That will be very attractive to a minority of investors that are restricted to Triple A rated debt products."
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[/h1]
 
Would you loan money to someone you know that spends waaay beyong thier means & has towering debt already? If you did give them money & then saw they went out & got a macbook pro along with 10 pairs of hard to find kicks, wouldn't you be pissed? I imagine that's how other countries are looking at us.

Someone mentioned this war costing us so much & it has. It's funny how the Soviets went into Afghanistan in the lates 70's/early 80's and thier ecomony collapsed. Here we are 30-40 years later & our economy has tanked chasing after people our government put into place. We trained, supplied arms, provided infastructure, and gave tons money to these guys.

We'll see how this all pans out...Get ready for a long & crazy ride.
 
It's really not that big of a deal. We definitely need to be more fiscally responsible though. We could very well be back at AAA in a few years.
 
Originally Posted by DubA169

conservatives are jumping for joy

borderline treason what they been doing with all the obstructionism.

And the president and democrats are straight push overs. Obama going in the jimmy carter direction.
Click to expand...

Damn shame.
 
Originally Posted by rashi

I remember Tim Geithner said awhile ago that the U.S. wasn't a risk for being downgraded.
Click to expand...
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yup
 
its just a warning tothe world that its about to go down.....

all you optimistic goverment knob slobbers will soon realize what a depression is all about...

THE DOLLAR IS DOOMED... you cannot borrow miney from CHINA and expect them to go along for the ride forever... CHINESE GOVT JUST RELEASE A STATEMENT TODAY WARNING OUR GOVT ABOUT THEIR SPENDING HABITS..

the can has been kicked down the road for a short period of time with the current "deal" congress made..

if you dont think this empire CANNOT COLLAPSE ask , Rome or Greece or U.K they too spent themselves out of power.... WE WILL DO THE SAME...

THOSE WHO DO NOT UNDERSTAND HISTORY WILL BE DOOMED TO REPEAT IT...

STACK GOLD and SILVER.. 1660 and 39 an oz respectively
 
Pre-Market futures:


Dow: -201.00


Who are these people still buying T-Bills?
laugh.gif
nerd.gif



http://www.cnbc.com/id/17689937/site/14081545/



I believe that the market knew about this awhile ago, slight decline coming up to the massive sell off a day before. This is all in the plan, though. The administration and the "Super Congress" will use this as a segway to raise taxes.
 
-via NYT blog by P. Krugman

I honestly can't believe the gall of this two-bit agency to make this move in the midst global economic turmoil. So needless - everyone knows that the US, by being a sovereign currency issuer that doesn't peg its currency, literally can't default. This isn't a market issue as much as it is a political one, otherwise government bond yields would have jumped in anticipation of this event. 

Now we get to enjoy watching the Republicans and Democrats play the blame game over whose fault it was that the US got downgraded by this moronic agency, while the former barely tries to contain their glee at the belief that Obama's re-election bid is permanently damaged.  And as always, nothing of significance will actually get done.  


Paul Krugman might just be the most destructive journalist in this country. He deliberately lies and defends his ideology, which is especially shameful for him since he is trained to be scientific and analytical.

He, like me, probably has not invested a great deal in US debt in the last year or so. Everyone knows that inflation will wipe out any serious chance of getting a positive real return on 2009-2011 US bonds.



  
Click to expand...
 
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