Gold? Silver? If you already have food and other preps, and didn't get any on the recent dip, there might be a buying opportunity coming up soon -or not. Just sayin'.
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by 2012 Countdown » Sat Aug 06, 2011 10:14 am
by Saurian Tail » Sat Aug 06, 2011 10:52 am
China tells US "good old days" of borrowing are over - By Walter Brandimarte and Melanie Lee, Reuters
NEW YORK/SHANGHAI, Aug 6 (Reuters) - China bluntly criticised the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.
Standard & Poor's cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation's budget deficits and climbing debt burden.
China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.
After a week which saw $2.5 trillion wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the euro zone crisis.
Finance ministers and central bankers of the Group of Seven major industrialised nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.
The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.
"The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.
French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.
In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.
It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.
"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
http://www.reuters.com/article/2011/08/ ... 4R20110806
by MacCruiskeen » Sat Aug 06, 2011 12:38 pm
[...]
The pathologies of the US economy are not exactly a secret. Michael Perelman identifies the following as weaknesses of US capitalism in its neoliberal phase: long-term underinvestment in research and development, low productivity resulting from a shift toward low wage service jobs, more financial vs productive investment, underinvestment in infrastructure, and an irrational military Keynesianism that results in the best innovation and research being conducted in secrecy, hoarded by the Pentagon etc.. Obama has performed sterling work on behalf of the Wall Street establishment, throwing his immense clout behind the bail outs, screening them from criticism, allowing them to continue to act with relatively little serious oversight, bringing them into government decision-making, and basically devising most of his policies with an eye to pleasing investment banks, bond traders and, at the outside, hedge funds. But what he doesn't done is re-orient US capitalism in a more rational direction. What he doesn't done is anything that could conceivably rescue the system from its pathologies. This raises the question of why the wider US ruling class isn't kicking up a stink about it?
David McNally has made a strong case for arguing that US capital, or at least dominant sectors of US capital, find more and more of their investments and sales overseas. Sluggish growth and profitability within the core capitalist economies has thus been more than offset by dynamism in south-east Asia. As a result of imperialism, then, much of American capital is at liberty to make significant returns without worrying too much about what happens to infrastructures, consumer power or labour productivity in the US. And with financialization, much of the US services and manufacturing economy generates revenues from financial investments rather than productive investment. The centrality of imperialism here may explain why reducing military spending to cover the deficit isn't on the agenda. It would also explain why the mandarins of Pennsylvania Avenue have appeared to be desperate to placate the ire of Republican tubthumpers, blasting away with biblical fury about the dangers of out-of-control spending.
So, we have an astonishing spectacle. The political leadership of the dominant capitalist states is now trying to shred the public investment that has hitherto acted as a lifeline to their economies. They are talking about savagely reducing labour costs, ostensibly to compete with China or India. And they're being urged on by the banks and business federations despite their awareness of the tremendous peril involved. This is actually going to undercut the conditions that led to their dominance in the first place. It's as if they've given up on the idea of having a relatively stable economy with a productive, educated, healthy workforce, and have decided instead to jack up the absolute rate of exploitation, take as much as possible until the economy crashes again, and then raise the flood barriers, hoard their capital, let others take the pain, and allow governments to police the inevitable fall out.
[...]
http://leninology.blogspot.com/2011/08/ ... ently.html
by Peachtree Pam » Sat Aug 06, 2011 2:15 pm
Italian prosecutors probing rating agencies Moody's and S&P after consumer groups complain
http://www.newser.com/article/d9otefjo0 ... plain.html
Italian prosecutors are investigating two leading credit rating agencies after consumer groups complained about turbulence on financial markets, officials said Thursday.
Recent reports and rating decisions issued by Moody's and Standard & Poors were tantamount to "failing" Italy even before the government could complete austerity moves meant to boost the nation's reputation in the markets "and while the markets were open," prosecutor Carlo Maria Capristo told Italian broadcaster Sky TG24 TV.
Investigators seized documents in offices of both firms, prosecutors said during a televised news conference.
The probe began months ago, spurred by contentions from Italian consumer groups that unjustifiably pessimistic rating reports were causing Italian stocks to tank. Prosecutors must begin a probe after such complaints.
The two agencies had issued warnings of possible downgrades amid fears that the eurozone's third-largest economy could be caught up in the European debt crisis.
Instead, a third agency, Fitch Ratings, said last month that Italy's package of austerity measures, approved by Parliament in July, would help stabilize the government's finances and its credit rating.
Three analysts from S&P and one from Moody's are under investigation, Italian news agency ANSA reported.
The ratings agencies "have lost all credibility," Elio Lannutti, head of the Adusbef consumer group told Sky TV at the news conference.
Moody's said in a statement it is cooperating with authorities. "Moody's takes its responsibilities surrounding the dissemination of market sensitive information very seriously," it added.
Standard & Poors said the accusations were unfounded.
"S&P considers the allegations being investigated are without any merit. We will vigorously defend our actions, our reputation and that of our analysts," said a statement from the ratings agency.
Calls to offices of Trani prosecutors and police went unanswered Thursday evening.
The Italian stock market watchdog, Consob, declined to comment on the investigation.
Thursday saw strong turbulence on Italy's main stock exchange in Milan, where the FTSE MIB benchmark index ended down 5.16 percent amid fears that the eurozone's debt crisis might eventually spread to Italy.
Trading had begun with a rise, of 1.2 percent, a day after Premier Silvio Berlusconi _ in a much awaited speech to lawmakers _ proclaimed Italy's economic foundations "solid." He also maintained that the recently approved austerity measures were sufficient to help rein in public debt.
by 2012 Countdown » Sun Aug 07, 2011 9:53 am
by MinM » Sun Aug 07, 2011 10:16 am
August 7, 2011, 9:23 am
I Heard It Through The Baseline
Oh, my. Treasury has a fact sheet explaining that $2 trillion error by S&P; it may sound technical, but to anyone who follows budget issues, it’s a doozy.
When the Congressional Budget Office “scores” policies, it does so relative to a “baseline” — a set of assumptions about what would happen in the absence of that policy. The normal CBO baseline — mandated by Congress — assumes that discretionary spending will rise with inflation, but no more. This isn’t realistic most of the time, since the demands for government services rise both with growing population and in many cases with rising economic activity; that’s one reason CBO always provides an “alternative fiscal scenario” that’s supposed to be more realistic. Under current conditions, however, with Obama already committed, even before the debt deal, to fairly harsh austerity, the zero-real-growth baseline is more realistic — and it’s how the debt deal was scored.
But S&P initially assumed that the debt deal was subtracting off a quite different baseline.
The point here is not so much the $2 trillion, which makes very little difference to real US fiscal prospects; it’s the fact that S&P stands revealed as not understanding basic analysis of budget estimates. I mean, I don’t think I would have made that mistake; real budget experts, like the people at the Center on Budget and Policy Priorities, certainly wouldn’t have.
So what we just saw was amateur hour. And these people are pronouncing on US credit-worthiness?
http://krugman.blogs.nytimes.com/2011/0 ... &seid=auto
by barracuda » Sun Aug 07, 2011 11:59 am
On July 21, 2010 President Obama signs Dodd-Frank into law. Prior to Dodd-Frank, the courts found that credit ratings are expressions of opinion that were protected under the first amendment, subject to a demonstration of actual malice:
The Dodd-Frank Financial Reform Act stripped away those protections, so that CRA’s were now subject to the same expert liability as an auditor or securities analyst, and required only a “knowing” or “reckless” state of mind for liability, rather than proof of scienter. It also repealed Section 436 of the Securities Act of 1933, which granted “safe harbor” for ratings, which were part of a prospectus.
Which, for obvious reasons, made the ratings agencies extremely nervous.
In October 2010 S&P issued its first threat to downgrade US debt: “If the U.S. government maintains its current policies for the next 40 years in the face of rising health care and pension spending pressure, it is unlikely that Standard & Poor’s Ratings Services would maintain its ‘AAA’ rating on the U.S.” The report paints a target on the back of Social Security and Medicare, says nothing about the wars, the Bush tax cuts, private health care costs or the absurdity of 40 year projections.
Ratings agencies are supposed to be reactive and analyze only what they see. They are not supposed to explicitly or implicitly give ”assurance or guarantee of a particular rating prior to a rating assessment.” By prescribing not only an austerity package for the United States, but stating that “in the long term, the U.S. AAA rating relies on reforms” of Social Security and Medicare, they most assuredly broke that rule.
S&P put forth no legitimate basis for their downgrade threat. As every reputable economist keeps reminding us (James K. Galbraith, Joe Stiglitz, FT’s Martin Wolf, Peter Radford, Bruce Bartlett, Krugman), the US is not Greece and does not face its risk of default. Unlike Greece, the US has its own currency, and unlike Greece, its debt is denominated and would be paid in its own currency. It can create that currency at will. So the only way the US can be forced into default is if Congress and the President do something that would be insane, like refuse to raise the debt limit, and the President then refuse to use the Executive authority of the Constitution to prevent a default.
But S&P was clearly determined to set itself up as arbiter of the US debt ceiling debate. They said nothing in December when the Bush tax cuts were extended, which dramatically exacerbated the deficit problem they warned of in October. But on February 14 President Obama releases his budget, which cut the deficit by $1.1 trillion over 10 years. The Standard and Poors committee found Obama proposal “disappointing.”
by justdrew » Sun Aug 07, 2011 5:09 pm
Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs
by Harvey » Sun Aug 07, 2011 5:14 pm
justdrew wrote:I wonder how the investigations of the ol' Fraud were going?
Maybe S&P are about to get rocked.
of course, now it may be politically impossible to bring charges, as it would look like payback.
oh I see Jane Hamsher is already on it, thanks barracuda!
but hey, they deserve some payback. How about we setup a rating agency rating agency?
A company I would very much like to see wiped out. Let's just jail their CEO now, send those fucks to Guantanamo.
we are already AT WAR
by justdrew » Sun Aug 07, 2011 5:19 pm
Sign our petition to the SEC: Revoke S&P’s authority as a credit ratings agency for their use of ratings as a political weapon and their attempt to avoid responsibility for their role in the financial crisis of 2008.
On the same day a bipartisan Senate committee found that Standard & Poors' misleading mortgage ratings fueled the financial crisis of 2008, S&P threatened to downgrade the US credit rating to discourage further inquiry.
Now S&P is threatening to downgrade the US credit rating AGAIN if lawmakers fail to agree to their ransom of no less than $4 trillion in deficit reduction - an irresponsible move that could send interest rates soaring and ravage the borrowing power of consumers, businesses and cash-strapped states.
Is S&P blackmailing the White House and SEC into absolving them of any responsibility for the 2008 crash by threatening downgrades every time there's an attempt to hold their feet to the fire? It certainly seems that way.
Sign our petition demanding the SEC strip S&P of their coveted authority as a Credit Ratings Agency for their attempts to avoid accountability and use their ratings as a political weapon.
Tell the SEC:
"Revoke Standard & Poor's NRSRO designation as a credit ratings agency for their attempts to influence the political debate over deficit reduction and to use their ratings as a weapon to avoid accountability for their role in the 2008 financial crisis."
by Nordic » Sun Aug 07, 2011 5:44 pm
by barracuda » Sun Aug 07, 2011 6:38 pm
Aside from hysterical laughter, here are the key points:1. - Obviously the US isn’t even close to insolvent. The gold in Fort Knox is held on the books at $37/ounce, for example. Most Federal lands are held on the books at 19th century valuations. Not to mention that the US’s debt is denominated in its own currency, which means it could simply be printed, and that the US government has a lot of unused room to tax, should it ever deign to use that on people with money, as opposed to those without.
2. - As everyone is pointing out, the idea that S&P, who rated all the subprime trash as AAA, has any credibility, is a joke.
3. - However, Obama and Democrats refused to destroy S&P when they had the opportunity and every reason to do so. The submprime crisis could not have been nearly as bad without S&P and the other rating’s agencies rating trash AAA so that investors who must buy AAA by law could do so. To put it simply, S&P engaged in systematic fraud. They, like everyone on Wall Street and in the major banks, have not been indicted for this. The choice to not indict is policy. Obama’s policy.
4. - If Obama did not want this to happen, it would not happen. Could you imagine what LBJ, Nixon or Truman (or, hell, Bush Jr.) would have done if a rating’s agency tried this? The President has the necessary tools to utterly destroy S&P and every senior analyst working for them. You could use terrorism statutes or RICO, just as two examples. Send the FBI into their offices, seize all the assets of both the company and everyone working for it, and then go through their records. I guarantee, as absolutely as the sun will rise tomorrow morning, that there is enough evidence of fraud in those records to put them away for life. In the meantime, RICO laws are used to seize all the assets of everyone involved, meaning they will be using public defenders (don’t like a bad law? Use it against real people.) When S&P informed the White House they were going to downgrade, the White House could have quietly let them know what the consequences would be.
5. - The US has effectively unlimited drawing rights from the IMF. Those drawing rights mean that if any of the core economies have an AAA rating, in effect, so does the US. (ie. if Germany is AAA, so is America.)
6. - S&P knows all this. They are doing this because they know the President and Congress and the real people in the oligarchy want it done. Remember, a downgrade increases rates, and that is a direct increase to their income. And they know the US can pay, they aren’t fooled by idiotic talk about a default. The US may default at some point, but that will be a political decision.
7. - This is another manufactured crisis, on top of the original manufactured debt ceiling crisis. The oligarchy wants the opportunity to buy federal assets at dimes on the dollar. They believe they don’t need the poor or middle class anymore, so they are good with getting rid of SS and Medicare. And Obama is, as he always has been, onside with this.
These people, are, however, playing with fire. Just because it’s a crisis that didn’t have to happen, a crisis, that is manufactured as another looting opportunity, doesn’t mean that it won’t have real consequences.
by Joe Hillshoist » Mon Aug 08, 2011 9:44 am
by Elihu » Mon Aug 08, 2011 9:50 am
barracuda wrote:Obviously the US isn’t even close to insolvent. The gold in Fort Knox is held on the books at $37/ounce, for example.
by Nordic » Mon Aug 08, 2011 4:44 pm
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