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Title: Will S&P Downgrade Be Another Y2K Scare?
Source: Naked Capitalism
URL Source: http://www.nakedcapitalism.com/2011 ... rade-be-another-y2k-scare.html
Published: Aug 6, 2011
Author: Yves Smith
Post Date: 2011-08-06 09:49:29 by lucysmom
Keywords: Chicken Little, Obama Did It, Pot, Kettle
Views: 41505
Comments: 76

It isn’t yet clear what the impact of the S&P downgrade of the US to AA+ will have. There are good reasons to believe, despite the media hyperventilating, that it won’t add up to much, and may perversely hit wobbly stock markets more than Treasury yields.

But there is a much bigger issue, namely S&P’s highly questionable conduct, the lack of any analytical process behind this ratings action, and the political implications.

Will the S&P Downgrade Have Much Immediate Impact?

Although I run the risk of being proven wrong, there are lots of reasons to think that the reaction in the Treasury market to the news will be underwhelming. We might see some reactions Monday as some investors who managed to be blindsided and aren’t happy with the downgrade exit but conversely, I know of investors who see any price softening as a buying opportunity.

Treasury yields fell 50 basis points last week despite the risk of a downgrade being very well telegraphed. S&P had asked for $4 trillion in deficit reductions (it tried disavowing that number) and made it clear it was going off to brood and might take action. And this market response took place with S&P leaking like a sieve.

Click for Full Text!


Poster Comment:

What was the S&Ps role in the mortgage crisis?

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Begin Trace Mode for Comment # 50.

#1. To: Badeye, A K A Stone, hondo68, Fred Mertz, Godwinson, go65, war, no gnu taxes, Skip Intro, ferret mike, jwpegler, brian s, mcgowanjm, Capitalist Eric, Mininggold (#0)

A country that controls its currency can always satisfy the IOUs it creates. The risk is inflation, not default. But ratings agencies assess credit ratings, not interest rate risk.

lucysmom  posted on  2011-08-06   9:55:55 ET  Reply   Untrace   Trace   Private Reply  


#2. To: lucysmom (#1)

The risk is inflation, not default. But ratings agencies assess credit ratings, not interest rate risk.

Inflation is over.

From Nixon's Gold Default to May 2005....that was inflation.

It's Deflation now, as everyone goes to cash...;}

mcgowanjm  posted on  2011-08-06   10:51:03 ET  Reply   Untrace   Trace   Private Reply  


#3. To: All (#2) (Edited)

Think $100 per acre for Prime Farmland.

mcgowanjm  posted on  2011-08-06   10:51:21 ET  Reply   Untrace   Trace   Private Reply  


#4. To: All (#3)

And then $50.

mcgowanjm  posted on  2011-08-06   10:51:50 ET  Reply   Untrace   Trace   Private Reply  


#5. To: mcgowanjm (#4)

Think $100 per acre for Prime Farmland.

And then $50.

I suppose that translates into a 50% cut in food prices as well.

Thunderbird  posted on  2011-08-06   11:00:44 ET  Reply   Untrace   Trace   Private Reply  


#6. To: Thunderbird (#5)

I suppose that translates into a 50% cut in food prices as well.

Remember gasoline for a $1?

It'll be a $ again.

Except that the avg yearly salary will be $7500.

And you'll be growing your own food, btw....;}

mcgowanjm  posted on  2011-08-06   11:03:42 ET  Reply   Untrace   Trace   Private Reply  


#7. To: mcgowanjm (#6)

And you'll be growing your own food, btw....;}

Why?

Why should deflation remove the capitalist impulse to provide for oneself by providing for others?

Thunderbird  posted on  2011-08-06   11:29:08 ET  Reply   Untrace   Trace   Private Reply  


#22. To: Thunderbird (#7)

Why should deflation remove the capitalist impulse to provide for oneself by providing for others?

It takes money.

Will you have it? Not credit. And definitely No Debt. Actual Linen Dead Presidents. Or you're a slave.

And the Capitalist 'Impulse' is to Oligarchy/Monopoly/ Kleptocracy/Plutarchy....the Top 50 000 owning the Top 60%.

mcgowanjm  posted on  2011-08-06   22:48:29 ET  Reply   Untrace   Trace   Private Reply  


#33. To: mcgowanjm (#22)

It takes money.

No kidding McGoo...why do you assume no one besides yourself has any?

Thunderbird  posted on  2011-08-07   10:58:57 ET  Reply   Untrace   Trace   Private Reply  


#37. To: Thunderbird (#33)

It takes money.

No kidding McGoo...why do you assume no one besides yourself has any?

Yeah Shitbird weighs in.

Don't call me names....just sayin...;}

Becuase it's NOT an Assumption.

The Bottom 90% are tapped out!

What part of Since Nixon & 1974 and then Reagan Stagnant wages, $1.5 Quadrillion in Debt derivatives are you NOT getting?

8D

mcgowanjm  posted on  2011-08-08   9:44:45 ET  Reply   Untrace   Trace   Private Reply  


#38. To: mcgowanjm, Thunderbird (#37)

Yeah Shitbird weighs in.

Don't tell me yukon has himself another screen name?

Guess it's obvious by the juvenile posting style.

Bill D Berger  posted on  2011-08-08   10:15:06 ET  Reply   Untrace   Trace   Private Reply  


#42. To: Bill D Berger (#38)

Hey Bill, go fuck yourself.

Thunderbird  posted on  2011-08-08   12:02:02 ET  Reply   Untrace   Trace   Private Reply  


#43. To: Thunderbird, Bill D Berger (#42)

Bill D Berger: Don't tell me yukon has himself another screen name? Guess it's obvious by the juvenile posting style.

Thunderbird: Hey Bill, go fuck yourself.

Nothing like proving his point.

Capitalist Eric  posted on  2011-08-08   12:57:16 ET  Reply   Untrace   Trace   Private Reply  


#45. To: Capitalist Eric (#43)

right all along

spoken like a true reaganaut.

you'll get first dibs in helll.....;}

in order to ask csars what to do.

that's the problem.

Another complexity interface to work thru.

The messages aren't getting thru.

On the periphery of Empire where they realy count now.

London could get ugly. You're on you're own....;}

mcgowanjm  posted on  2011-08-08   18:13:42 ET  Reply   Untrace   Trace   Private Reply  


#47. To: mcgowanjm (#45)

spoken like a true reaganaut.

you'll get first dibs in helll.....;}

in order to ask csars what to do.

that's the problem.

Another complexity interface to work thru.

The messages aren't getting thru.

On the periphery of Empire where they realy count now.

London could get ugly. You're on you're own....;}

Ummmmmmmmmm....

Ok.

Seriously....

PUT.... DOWN.... THE... BONG...

Capitalist Eric  posted on  2011-08-08   19:15:40 ET  Reply   Untrace   Trace   Private Reply  


#50. To: Capitalist Eric, All (#47)

Also, CE, You need to keep in mind that the medication you take may also negatively affect your body's ability to cope with higher temperatures:

Medicines many older people take also may make them more vulnerable to the heat. These include diuretics for high blood pressure, which increase urination - and make it more important to drink plenty of water.

Some types of drugs can interfere with sweating and raise body temperature, including some medicines for insomnia, nausea, prostate conditions, Parkinson's disease and even Benadryl. Many list "dry mouth" as a side effect - a tip-off to drink more water.

Just because the heat didn't used to bother you when you were young doesn't mean you should ignore your body's warning signs when it's getting more and more dehydrated in hot temperatures.

8D

mcgowanjm  posted on  2011-08-09   9:35:48 ET  Reply   Untrace   Trace   Private Reply  


Replies to Comment # 50.

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