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Another Credit Agency Downgrades US


By Dan8267   Follow   Tue, 10 Apr 2012, 3:28pm PDT   1,607 views   13 comments
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This time from AA+ to AA.

http://www.breitbart.com/Big-Government/2012/04/06/USA-Credit-Rating-Downgraded

Comments 1-13 of 13     Last »

APOCALYPSEFUCKisShostikovitch   Tue, 10 Apr 2012, 4:26pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 1

Obviously, it's because housing is underpriced!

TMAC54   Wed, 11 Apr 2012, 12:01am PDT   Share   Quote   Permalink   Like   Dislike     Comment 2

APOCALYPSEFUCK is Tony Manero says

Obviously, it's because housing is underpriced!

That's Right ! I was just on my way out the door to make several offers at twice the asking price.
Welcome back.

It is beginning to appear the banks did not generate the confidence needed to keep the stock market rolling. They had hoped to sneak out the back door and simultaneously begin reinvesting in real property. Is this their last thread without the bernanke addiction ?

tdeloco   Wed, 11 Apr 2012, 7:48am PDT   Share   Quote   Permalink   Like   Dislike     Comment 3

They added that there was a 1.2% probability of U.S default in the next 12 months.

It's still waaay too early to call US default, but we're getting there, unless things change.

This time, treasury yields are up a few basis points.

Dan8267   Wed, 11 Apr 2012, 9:37am PDT   Share   Quote   Permalink   Like   Dislike     Comment 4

The US won't default honestly. It will partially default through inflation. The question is how much.

Already treasures have a negative real interest rate return. Why would I give my money to the U.S. government at -3% interest?

tdeloco   Wed, 11 Apr 2012, 10:46am PDT   Share   Quote   Permalink   Like   Dislike     Comment 5

Dan8267 says

The US won't default honestly. It will partially default through inflation. The question is how much.

Already treasures have a negative real interest rate return. Why would I give my money to the U.S. government at -3% interest?

Yep, fiscal repression is probable, but we're just not there yet. Our debt is still increasing rapidly (annual increase is approx 10% nominal). GDP/inflation is supposed to be only 2-3% at this point.

We can jump through hoops just to avoid a default. Either way, it's not gonna be pretty.

I also read articles that suggest we'll stop borrowing and just print money to directly fund our financial obligations.

Dan8267   Wed, 11 Apr 2012, 11:12am PDT   Share   Quote   Permalink   Like (1)   Dislike     Comment 6

tdeloco says

I also read articles that suggest we'll stop borrowing and just print money to directly fund our financial obligations.

And history repeats itself like a broken record.

Vicente   Wed, 11 Apr 2012, 1:42pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 7

Who gives a crap? These credit agencies are completely worthless and discredited anyhow.

Your personal "credit rating" is a load of bunk and hokum too.

Dan8267   Wed, 11 Apr 2012, 2:09pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 8

Vicente says

Who gives a crap? These credit agencies are completely worthless and discredited anyhow.

True. But even crap opinions can have huge effects on the economy if enough people buy into them or are afraid that other people will.

drtor   Wed, 11 Apr 2012, 2:20pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 9

Vicente says

Who gives a crap? These credit agencies are completely worthless and discredited anyhow.


Your personal "credit rating" is a load of bunk and hokum too.


“Eagles are dandified vultures” - Teddy Roosevelt

Actually this was from Egan Jones - they are pretty credible (no pun intendend). Unlike the major credit rating agencies, EJ make a living collecting fees from investors, not from the entities being rated. They downgraded US way before S&P the first time, now they did it again.

However the US government only endorses corrupted credit rating agencies that are paid for by those who are being rated, hence, nobody paid attention when EJ downrated the US the first time.

Dan8267   Wed, 11 Apr 2012, 3:58pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 10

So, can I trust EJ to rate stocks and bonds accurately?

drtor   Thu, 12 Apr 2012, 7:44am PDT   Share   Quote   Permalink   Like   Dislike     Comment 11

Dan8267 says

So, can I trust EJ to rate stocks and bonds accurately?

"Trust" is a pretty big word. I would like to think they can provide useful information, yes. There are some academic papers showing that paid-by-investor ratings are more accurate than paid-by-the-rated ratings (quelle surprise!).

Bellingham Bill   Thu, 12 Apr 2012, 8:54am PDT   Share   Quote   Permalink   Like   Dislike     Comment 12

tdeloco says

I also read articles that suggest we'll stop borrowing and just print money to directly fund our financial obligations.

This will work well for social security's needs -- just monetize the $2.5T in the SSTF over the next 25 years. We're already doing that with the 2% payroll tax cut, Congress is just printing the bonds to pay for this and stuffing them in the SSTF (to go with the $1T+ in printed accrued interest, 1985-now).

The inflation this printing will produce should be counter-acted by the 'deflationary balance-sheet recession' spiral everyone else is in.

tdeloco   Thu, 12 Apr 2012, 12:35pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 13

Delurking says

This will work well for social security's needs -- just monetize the $2.5T in the SSTF over the next 25 years. We're already doing that with the 2% payroll tax cut, Congress is just printing the bonds to pay for this and stuffing them in the SSTF (to go with the $1T+ in printed accrued interest, 1985-now).

The inflation this printing will produce should be counter-acted by the 'deflationary balance-sheet recession' spiral everyone else is in.

Oh, we're monetizing debt at an even greater pace than that: In 2011, the Fed purchased 61% of U.S. Treasuries. The deflation will only counter-act the printing for so long. After several years, it's gonna be like comparing a mouse to an elephant.

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