And I present you what the bears were hinting 2 hours prior to the bell.
From ZH:
Well, so much for the conspiracies. S&P has just released a scathing critique of the total chaos that this country's government has become. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability." What to expect on Monday: " it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021."
Click here to read the rest...
And here is Schiff Dobs and two other plugs.
Poor little Timmy Geithner, he didn't manage to get out in time. The Ben Bernank is gonna have to jack up rates, and that printing press is gonna be going full out to buy all of that US debt. No one wants it at AAA, at AA it looks worse than Obama's birth certificate.
ReplyDeleteAnd on a side note....when did Dobbs get botox?
ReplyDeleteQuestion, do we buy more phyzz right the fuck now, or wait a few days into next week?
ReplyDeleteActually not sure if this downgrade will affect the stock market that much. Part of it seems priced in already. To my understanding, this will just make QE3 even more obvious since the Government is now under some kind of pressure to keep some kind of control over spending. So now monetary policy has to make up for the lack of spending to avoid a recession (double or triple dip wtv…). Bonds might get slightly hurt, but then again seems like this rumor was already out there this afternoon. Pretty sure Gold will move up, and USD down. I'm wondering what Silver will do, if the market is to fall even further, according to the last couple of days Silver and miners will follow the stockmarket. There is alot of resistance at $1680 for gold but if it closes above this mark, then gold will be entering a new upward channel and entering Jim Sinclair's so called "phase 3", even thou he says $1765 is the number to look at.
ReplyDeleteThe coverage of this is amusing. Bloomberg is already out in damage control mode. There was someone on there who suggested that maybe there's a problem with ratings agencies. LOL. Now that they've downgraded the holy grail of liquid investments they're foaming at the mouth. Great theater.
ReplyDeleteAny real possibility that money moves from bonds back into stocks for a minute here?
ReplyDeleteQE3 now automatic, nobody else will now buy the debt but benny. This should make silver go up, but they want it dead. However gold will pull it up, it always does.
ReplyDeletecolor, I think at this point it's a crapshoot. That's the problem with these things... There were rumors so the question is did the rumors get priced in already or not? Also we have the ECB potentially printing money now which should help asset prices.
ReplyDeleteAll the markets turned into a giant shitstorm as QE2 was coming to an end. Trying to figure out what happens next with certainty is like trying to predict the weather.
I'm sticking with the high probability trade which is that the Fed is forced to do another round of QE. Honestly, we all know it's completely stupid but at the same time if they don't do it there's going to be hell to pay. Either way we're fucked.
"Bernanke May Borrow From JFK, Use 'QE3' to Buy Longer-Dated Treasurys"
ReplyDeletehttp://www.cnbc.com/id/44029585/
flaunt,
ReplyDeleteI hear ya -that's why I'm asking so many questions! Haha, I just figured the Fed would hold off on QE3 until closer to election time so it would put Obama over the top, but recent developments may force their hand? I posted earlier, "I'm surprised no one here is talking about a dead cat bounce in dji/s&p/nasdaq. It seems obvious to me that it would do this before more blackness. Am I crazy?"
I still feel there is a last gasp here, a death rattle before shit goes under.
ReplyDeletethanks to guys like these, not schiff, the two obvious paper pushers, many people are going to be wiped out...
ReplyDeletei literally just had a conversation with my wife and on a family topic, i asked "how can all the facts and multiple proofs be staring someone in the face and they still maintain their denial?
color,
ReplyDeleteWho knows for sure if they'll wait. All I know is that they actually believe that QE will help the economy in more than the short term. They say there is a "lag time," so if they start now they'll have to wait a few quarters before deciding if it's "working." Campaigns are going to be starting very soon and the last thing the President wants is to have the appearances of a shitty economy on his hands while he's trying to explain what an awesome first term he's had. Inflation can be blamed on all sorts of bullshit like the weather, the Chinese, and speculators, but a shitty economy is always blamed on the President. Irrational as it may be that's what happens.
I think BB is scared not just of disappointing Obama but any potential replacement of his, because he has to be reappointed from time to time. BB will be up for reappointment in a couple years so he better fix things and fast.
Unfortunately we can't read his mind nor force him to do anything. He has to decide what he is going to do. All we can do is try to extrapolate the future based on his past actions. We know the economy is rolling over. We know a rolling over economy leads to deflation when it's as levered up as it is. We know he hates deflation above all else. We know the best solution for deflation is throwing money out of helicopters. So if HE comes to the conclusion that the economy is rolling over, then the conclusion holds.
Don't forget Joe "Blabber-mouth" Biden's words. Here is the plan circa 2008. It may have changed since then, but this is what the plan was back then. I'll re-quote them here for you:
ReplyDelete""Gird your loins," Biden told the crowd. "We're gonna win with your help, God willing, we're gonna win, but this is not gonna be an easy ride. This president, the next president, is gonna be left with the most significant task. It's like cleaning the Augean stables, man. This is more than just, this is more than – think about it, literally, think about it – this is more than just a capital crisis, this is more than just markets. This is a systemic problem we have with this economy." "
"Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy." "
""And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right.""
"' We're gonna have to make some incredibly tough decisions in the first two years. So I'm asking you now, I'm asking you now, be prepared to stick with us. Remember the faith you had at this point because you're going to have to reinforce us." "
""There are gonna be a lot of you who want to go, 'Whoa, wait a minute, yo, whoa, whoa, I don't know about that decision'," Biden continued. "Because if you think the decision is sound when they're made, which I believe you will when they're made, they're not likely to be as popular as they are sound. Because if they're popular, they're probably not sound.""
""We do not have the military capacity, nor have we ever, quite frankly, in the last 20 years, to dictate outcomes," he cautioned. "It's so much more important than that. It's so much more complicated than that. And Barack gets it.""
""I probably shouldn't have said all this because it dawned on me that the press is here," he joked.
"All kidding aside, these guys have left us in a God-awful place," he then said of the Bush regime, promptly wrapping up his remarks. "We have the ability to straighten it out. It's gonna take a little bit of time, so I ask you to stay with us. Stay with us.""
My favourite politician after Ron Paul is Joe Biden. God I love that "man".
Biden to Supporters: "Gird Your Loins", For the Next President "It's Like Cleaning Augean Stables"
ReplyDeleteOh another thing - in his July 13 testimony he said the Fed could do additional securities purchases if deflation risks reemerge. I think the markets are telling us deflation is here. Oil poked through 85 to the downside today, stock market has been puking, real estate has been sucking, and bonds have been soaring. I'm not sure what he looks at to determine deflation risk but it looks like deflation to me.
ReplyDeletehow the fuck will the price of food go down? are people gonna eat less? will they vanish into the Bermuda triangle? Is apple gonna release an eatable ipad?
ReplyDeleteflaunt,
ReplyDeleteTuesday is not a long time to wait to find out! =) I would be surprised if more QE was unveiled or even hinted at just yet. In part because I have always anticipated it would take 20-30% stock market droppage before the helipad lit up, but this week saw a disorderly retreat as they say. Panic and now the largely expected, yet unprecedented downgrade has me more than somewhat postured up for anything. Anyway, it's still a bull market and I tend to believe that the earnings reports propped by all that dirty QE cash will keep the ghosts flying for a little longer. I realize that most of us are on the same general page here, but I keep coming to the realization that this whole thing is taking and going to take longer to unravel than it should. Change tends to come gradually and then all at once. This particular panic doesn't seem like the droid we're looking for.. .
reefman,
ReplyDeleteAs I recall Heracles killed Augean after completing the tasks. It is important to understand that Obama is Heracles, the markets are the stables and WE are Augean.
flaunt,
ReplyDeleteI remember him saying that, and yes, his singular concern is deflation. Inflation doesn't even exist as far as he can tell -nor would it ever seem to be a result of his actions, ie his fault, should it one day become as undeniable.
He sees deflation man, you know he does, it's going to be a political call in my opinion.. .as usual.
freakazoid, the price of food can go down as a result of lower commodity prices. Futures on most foodstuffs are well off their highs and in many cases plummeting. I don't actually think we'll get to see much of the lower food prices that would be coming our way, though.
ReplyDeletecolor,
ReplyDeleteSorry I guess I wasn't clear. I'll be very surprised if he says they'll be doing more QE at Tuesday's FOMC meeting. I do expect that there will be some language to soothe the markets. Depending on how bad the numbers are between that meeting and Jackson Hole on the 26th, I'm hoping there will be strong indications if not an actual announcement then. A lot can happen between now and then because of so much shit hitting the fan at once so we'll see.
flaunt,
ReplyDeleteagreed. i would still consider that much sooner than expected, but the way things are flying right now, three weeks is an eternity. every day I wake up and turn on my computer i get a rush of anticipation
Here are some interviews on bloomberg about this:
ReplyDeletehttp://www.bloomberg.com/video/73606936/
This shit is gonna sell off like crazy on Monday.
ReplyDeleteAny guesses on gold/silver for Monday?
ReplyDeletePersonally, I think everyone knew that this downgrade was coming. The reaction is largely political face-savings and muck-raking back and forth. It's not exactly like the market just shit itself and said "What?!? US debt is sketchy??? REALLY??"
I expect a pop in gold, a follow up pop in silver back above $40, and then a slam.
The PTB are pissed that someone actually called a spade a spade.
FOX news, always "fair and balanced"....NOT!
ReplyDelete@B Is ANYTHING "always". Are you anything always? Come on.
ReplyDeleteWho's the plug from Moodys, or better still who cares? Nothing's changed, the slug knows in his mind the louder he shouts the more he's right. Can you imagine having a bother in-law like that at the family function dinner table - STFU? Stab my knees with a dull butter knife!
ReplyDeleteDobbs: "By my count it's 4." Douche.
ReplyDelete"even gold sold off" this is disinformation! by my math the dollar strengthened as everyone sold off their holdings creating a demand for dollars. If I remember correctly, the dollar went up more than gold declined. Therefore demand actually increased. But what do I know, I'm just a sheep.
ReplyDelete