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DID Standard & Poor Shoot Itself In The Foot By Downgrading The USA From AAA To AA+?
www.martinarmstrong.org ^ | August 6, 2011 | Martin A. Armstrong

Posted on 08/07/2011 10:41:32 PM PDT by Razzz42

...Domestically, you are still better off with federal paper

than state or municipals. The S&P is merely confirming the Sovereign Debt Crisis.

There is no doubt that we have a serious Sovereign Debt Crisis. However, if that is the real reason for

the S&P Downgrade, then it should apply to ALL countries and the real rating should be BELOW JUNK!

Why? There is NO collateral! If a country defaults, you cannot go to court and seize property. You can’t

run down to the National Art Gallery and start walking out with Renoirs. Illustrated above is a chart of

the Total Accumulative Interest Expenditures as a Percent of Total . Had we just printed money and

NOT borrowed this would have eliminated 68.2% of the entire national debt. There would have been

NO competition with the private sector to borrow reducing economic growth, raising unemployment,

and causing taxes to rise. We would NOT need a credit rating and inflation would have been at least half

the rate over the last two decades. It costs MORE to borrow than it does to print and there is NO

empirical evidence that borrowing is less inflationary than printing. Oh well! That’s just another of those

stupid myths. To make matters worse, 46% of these interest expenditures are exported and have just

ABSOLUTELY NO domestic stimulus affect whatsoever. So ya! Get those rich bastards. Tax all their

money to export it and stimulate the world. Keep that theory going and you should succeed in

accomplishing the socialist goal of the perfect world. Nobody will have any money and we should be a

third world country by then. But what the hell; we got those rich bastards! As Herbert Hoover wrote in

his memoirs; Sometimes government burns down the barn to get the rat.

(Excerpt) Read more at martinarmstrong.org ...


TOPICS: Business/Economy; Government
KEYWORDS: banking; ratings; treasuries
Somewhere Armstrong makes reference to the non-sophisticated when it comes to stock market manipulation(s) which means while the dumb money is selling the smart money is buying.

Anyway, his main point is, why not issue interest free money (by printing) instead of having to pay interest on bonds the US sells to foreign nations? Good idea but the banksters don't like it that way (no interest to collect or profit from).

1 posted on 08/07/2011 10:41:41 PM PDT by Razzz42
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To: Razzz42

S&P Motives?

Very interesting. The owner of S&P is McGraw Hill.

Note this:

Pre-Marketing: S&P for sale?

http://www.businessbrokerjournal.com/blog/pre-marketing-sp-for-sale

“Big breakup? Activists put pressure on S&P owner McGraw Hill “


2 posted on 08/07/2011 10:48:34 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: Razzz42
‘interest free money instead of bonds.=destruction of the currency.
3 posted on 08/07/2011 10:48:34 PM PDT by fortheDeclaration (When the wicked beareth rule, the people mourn (Pr.29:2))
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To: Razzz42

Standard & Poor was wrong on Enron, they were wrong on B.S. and they are wrong now.


4 posted on 08/07/2011 10:48:47 PM PDT by trumandogz
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To: Razzz42

Interesting reading.


5 posted on 08/07/2011 10:51:02 PM PDT by Cheetahcat ( November 4 2008 ,A date that will live in Infamy.)
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To: Razzz42

Oh please... We deserve his rating or lower!


6 posted on 08/07/2011 11:02:38 PM PDT by Deagle
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To: fortheDeclaration

...To make matters worse, 46% of these interest expenditures are exported and have just ABSOLUTELY NO domestic stimulus affect whatsoever...

Either I’m missing your point about the destruction of money or you think interest/usury is a good thing.


7 posted on 08/07/2011 11:14:51 PM PDT by Razzz42
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To: Razzz42

It’s not just debt that is the cause of the lost AAA ratitng.

Since the housing/financial crsis, we have resorted to mob rule and gangster government, and gone from being a nation of laws to that of men. Many of the elements that contributed to having the higest rating, like a respect for property rights and orderly bankruptcy processes has gone out the window. And that says nothing about a radical executive that violates laws he doesn’t like. And that says nothing about the jacking of the capital reserve ratios in order to funnel money into Fannie and Freddie and governemntal entites with ratings AA and above, that got us into this mess in the first place. It really was no accident that all those mortgage securities generated by the GSEs were rated AAA and ended up ripping off investors all over the world in a really big way.

The US just isn’t the same place it was when I was a kid, and that’s a real shame.


8 posted on 08/07/2011 11:17:36 PM PDT by dajeeps
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To: dajeeps
Armstrong covers a lot of bases like the rule of law, history of banking and currencies, history of markets but his basic finding is in charting the cycle of human nature, it never changes when greed is involved and is predictable. Same as governments always take their citizen's money...one way or another. Armstrong Economics
9 posted on 08/07/2011 11:26:21 PM PDT by Razzz42
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To: Razzz42
"It costs MORE to borrow than it does to print and there is NO empirical evidence that borrowing is less inflationary than printing. Oh well! That’s just another of those stupid myths."

Armstrong makes some very good points in his article, but the one above is not among them.

Weimar Germany in the early 1920's offers the solid empirical proof required by Armstrong--an ecomomic system committing suicide by printing press.

A 1 Billion Mark Bank Note from the Weimar Republic

A 1 Billion Mark Bank Note from the Weimar Republic

10 posted on 08/07/2011 11:30:49 PM PDT by henbane
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To: trumandogz

Are they planning to shoot themselves in the other foot?

http://www.freerepublic.com/focus/f-news/2760265/posts


11 posted on 08/07/2011 11:34:47 PM PDT by 353FMG
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To: henbane

You are missing the point about having to pay interest on bonds which are printed in lieu of actual money (printing). Besides, Wiemar was being forced to pay off war debts to other countries which ruined their local economy, the punishment for warring and losing. Where’s Wiemar today after the world banks inflict a depression on the world, at the time, starting with Wiemar?


12 posted on 08/07/2011 11:58:32 PM PDT by Razzz42
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To: Razzz42

Have a look at our US account balance for last year, and it’s much worse by now.

CIA World Factbook
Country Comparison: Current Account Balance
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html


13 posted on 08/08/2011 12:15:50 AM PDT by familyop (We Baby Boomers are croaking in a noisy avalanche of rotten politics smelled around the planet.)
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To: dajeeps
Since the housing/financial crsis, we have resorted to mob rule and gangster government, and gone from being a nation of laws to that of men."

You got that right. Every credit rating group should have downgraded the US when the government ignored over a hundred years of bankruptcy law and took over GM. That proved that they will nationalize property just like any third world dictatorship even if they call it something else. Regards

14 posted on 08/08/2011 12:26:22 AM PDT by Rashputin (Obama is insane but kept medicated and on golf courses to hide it)
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To: Razzz42

If it’s from the Federal Reserve, there’s interest. Even if the government printed it without the discretion of the federal reserve, that would cost revenues to pay government employees, administrators and all for the printing. It would also, of course, inflate the money supply, making the currency worth less.

If you want sustainable revenues to pay those who still have jobs (government, services, etc.), those will have to come from a large manufacturing base. Have fun. Enjoy the ride.


15 posted on 08/08/2011 12:27:48 AM PDT by familyop (We Baby Boomers are croaking in a noisy avalanche of rotten politics smelled around the planet.)
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To: fortheDeclaration

S&P in bed wih bin bama? Crisis they didn’t want but want?


16 posted on 08/08/2011 12:31:36 AM PDT by Always Independent
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To: Always Independent

Note how they are trying to hang the downgrade on the Tea Party... which is not a real party in any sense.... but precisely what Obama fears most in the next election. He cares not one bit about how this decimates the self same citizens he says he cares so much for..... it’s all about getting re-elected. What a POS.


17 posted on 08/08/2011 12:35:02 AM PDT by antceecee (Bless us Father.. have mercy on us and protect us from evil.)
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To: Razzz42
Look beyobd the sound bites etc....

The real story was to set up a New world Currency this is what all this craziness of borrowing money was about the real goal to bring about or force the nations to comply with a One World currency!

Amerikan Expose | Hegelian Dialectic
aka Marxist Dialect

18 posted on 08/08/2011 12:35:23 AM PDT by restornu (I really do need to give up my summer cottage in Babylon...Love One Another... God Bless America!)
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To: Always Independent

S&P in bed wih bin bama? Crisis they didn’t want but want?

***

I agree wonder if Barney Frank knew John Chambers...

Fannie & Freddy never got slammed but the US was slammed...
chickens come home to roost!

S&P’s Credibility Gap | Crooks and Liarscrooksandliars.com › Blogs › John Amato’s blog - Cached- Block all crooksandliars.com results
Not helpful? You can block crooksandliars.com results when you’re signed in to search.crooksandliars.com
1 day ago – John Chambers, managing director of sovereign ratings at S&P was ... A gay guy without a cell phone.” as uttered by Punch Epstein in The ...
http://crooksandliars.com/john-amato/sps-credibility-gap


19 posted on 08/08/2011 1:11:52 AM PDT by restornu (I really do need to give up my summer cottage in Babylon...Love One Another... God Bless America!)
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To: Razzz42
No good can ever come out of this.

An American Expat in Southeast Asia

20 posted on 08/08/2011 2:47:10 AM PDT by expatguy (The Expat Needs Beer Money - Cough Up!)
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To: Razzz42

Maybe I’m an idiot (here), but what’s the point of having credit rating agencies if they wait for a default before telling you that you made a risky investment? That is exactly what happened with the housing bust, and a LOT of us think their execs should be doing time because of it.

If anything, they’re way too late in downgrading the US. We should have been downgraded a decade or two ago when it was clear what our state was regarding unfunded future obligations. By 2009, it was clear that the Obama administration had absolutely no concern about running up debt, and we should have moved to junk territory. By now, deep in junk territory.

So I have no idea what this guy is talking about - or we have multi-billion dollar business that do what any of us FReepers can do which is read the news, see that a company (or government) is broke, and then downgrade them. Yea...tough work if that’s all that is expected of them.


21 posted on 08/08/2011 4:03:01 AM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts)
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To: trumandogz

Anyone who does not think the US did not deserve a downgrade is an self-deluded idiot. Hey, don’t feel bad, the AnointedIdiot and much of the libtard progressive camp is in this camp.....=.=


22 posted on 08/08/2011 4:37:12 AM PDT by cranked
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To: Deagle

Yes S&P did the right thing.

The other agencies have done it too, and some are threatening it.

but as all things Obama, the media is right there to demonize S&P, the taxpayers and Tea party.

The victims.


23 posted on 08/08/2011 5:16:23 AM PDT by Freddd (NoPA ngineers.)
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To: Razzz42
There is NO collateral! If a country defaults, you cannot go to court and seize property.

The author should read a little history. This exact thing happened several times in South and Central America during the 19th century. When some tin horn dictator missed a payment the Royal Navy or someone else would seize the custom houses and collect the import taxes until the loans were paid off. What stopped that practice was the emergence of the US as a serious naval power in 1898 and our ability to actually enforce the Monroe Doctrine. With the US now being the country in default watch for US property to be seized to force repayment.

Now I'm not talking about grabbing California, although I might be glad to be rid of San Francisco. No they will grab US assets held in foreign banks. Stockpiles of US equipment stored in Europe, Asia and the Middle East. The US has billions of dollars in assets spread all over the world. So they don't have to come to New York to seize them. There are also the assets of US corporations. There are more than one Hugo Chavez style dictator out there who would welcome an excuse to nationalize some imperialist Yankee company. And failure to repay debt gives them all the excuse they would need.
24 posted on 08/08/2011 6:55:31 AM PDT by GonzoGOP (There are millions of paranoid people in the world and they are all out to get me.)
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