Posted on 06/10/2011 5:20:02 AM PDT by Zakeet
“Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.”
Pre market is down- they don’t like it either.
Germany post WW1 collapsed under the debt load placed on it by the victorious allies. The Germany solution to the debt was to print money and lots of it. Devaluing it's currency to worthless allowed Germany to pay off it's debt. Lots of smart people expect the USA to do something similar. Whence gold/silver soar while the dollar falls.
The Chicaps already sold their bonds
Now we just have to get around Section 2.
Cheers!
It seems the ChiComs are already getting ready to buy a huge chunk of Idaho.
Zero is either a master or totally incompetent. I’m beginning to think this all being orchestrated to cause total global chaos. So far since taking office he has:
1. Put the country into default
2. Crashed the dollar
3. Doubled the price of gas
4. Opened up an illegal attack in Lybia
5. Caused unrest in multiple the ME
6. On the brink of collapsing NATO.
7. Collapsed the housing market
8. Maintained a high unemployment status
Is CWII right around the corner?
Hopey-Changey!
Read about George Wiley and the National Welfare Rights Organization. The radical communist idea has always been (at least from the late 60’s) to crush the system under it’s own weight, by putting as many on welfare programs as possible.
We’re here, folks.
And most of the people around Obama are the Chicago/berkeley radicals that have been talking about this for 30+ years.
And what do I see in the 10 year treasury market as a result of this downgrade?
Nary a peep. In fact, a collective YAWN.
How come I don’t see any move in the 10 year bond yield? If any, YIELDS HAVE DROPPED BELOW 3% !!
was germany’s debt in gold/silver? I would think it would have been, deflating script would have had no impact on payments in metal.
Something back in my head says also that hitler actually discontinued debt payments but that may be decades of fog getting confused.
You are correct, had to look it up, oh well there goes that theory, lol, thanks for the corcection.
Uh-oh.... this is a bad sign
So?
We’ll raise taxes and take more freedom!
That’ll show you Germans! :D
/sarc(?)
That’s correct. Part of the reason why is that the Fed is still buying US paper from the primary dealers.
I believe the precipitating event will be an announcement that comes out the Federal Reserve, not the US Treasury. Right now, rates are being kept low by Fed games, which has been deliberately warping the market. That’s what QE is - playing games with the yield curve.
At some point, the Fed will lose credibility. I don’t mean credibility with the American people - they’ve already lost all of that. I mean that they’ll lose credibility with the money people - ie, the people in the major bond markets. The event that finally makes rates explode upwards will be something wherein the Fed loses most (or all) of their credibility, probably because they’re found to have been playing games with their balance sheets or they institute another quiet bailout of a major US i-bank through one of their silly alphabet soup programs.
BTW - part of the reason why the 10 year moved below 3% is the European situation. As bad as the US debt market is, it is still a viable and reliable place to park 10’s of billions in capital if you’re looking to get the heck out of Euro-denominated assets. As bad as our situation is right now, we don’t have the problems of the Euro. And the problems in Euro-land are quickly coming to a head.
Because nobody's buying long bonds except for a few (very few in fact) insurance companies and pension funds -- almost all of whom are required to do this by law or political considerations.
For example, the highly puffed latest 7-year auction was an unqualified flop with about 75 percent of the paper tendered back to the Fed by the Primaries.
Long bond yields will not take off until the Fed quits printing massive amounts of money. Right now, they can't afford to do this without killing the stock market. Unfortunately, by the time the Fed starts to raise interest rates, our fiat dollar currency will be completely ruined, and nobody will have the financial resources or stupidity to buy more worthless paper.
A big problem for the Fed now is that they’re trapped between their own rhetoric and market expectations.
The market is selling off because of the economic data and the expectation that as QE2 ends, the market will decline as the dollar might come up off the mat.
However, the dollar isn’t coming up, people still expect QE2 to end and the market is selling off as commodities continue to climb.
The Fed is now in a liquidity trap of their own making, and the door is swinging shut.
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