Monday, April 18, 2011

S&P revises U.S. outlook to "negative."



I’ve said for a long time that the rating agencies (idiots) will eventually downgrade US debt even though there is NEVER, EVER, EVER a solvency risk for a nation that issues its own currency and where its debts are denominated in that currency.

However, these are the same IDIOT agencies that rated all the toxic subprime debt AAA, so what do you expect? (Watch the movie, Inside Job for more unbelievably eye opening footage on how corrupt the financial sector AND mainstream economics has become. It will make you sick.)

The rating agencies WILL eventually downgrade the US, just as they did to Japan. (BTW, the bond market has barely moved on this announcement.)

This is just one near-term problem that could be presenting itself for stocks. The other is the debt ceiling. This ratings scare will likely cause Obama to panic and go with MASSIVE spending cuts, making the longer-term outlook somewhat negative.

8 comments:

Anti said...

Mike,

I'm so glad you blogged about this. I urge readers to contact their representatives and the President to make radical changes to how these ratings agencies do business.

I contacted my House Rep. this morning and asked for the death penalty for these corporations, a la Arthur Andersen. I don't think it was a good idea to destroy Andersen, but I certainly would like to see Moody's, S&P, etc. cease to exist.

Look at the subprime derivatives and some of their country ratings. That's really all anyone need see. These agencies are dangerous, corrupt(paid by some of the entities they rate), and outrageously stupid.

Please visit house.gov and senate.gov today, along with whitehouse.gov and contact leaders to at least rein these ignorant crooks in.

googleheim said...

IS THIS WHAT WE GET FOR SUBSIDIZING THE EURO ?

WE PROVIDE OPEN SWAP LINES BECAUSE THEY ARE MELTING IN THEIR PIIGS PROBLEMS AND WE BASICALLY UNDERWRITE THEIR 8 WEEK STATE MANDAED VACATIONS.

THE EURO DOES NOT DEPRECIATE AT ALL

AND THEN OUR DEBT COMES TO THIS ?

WE NEED TO SUE THE S&P AND RATINGS AGENCIES.

WASN'T BUFFET WITH THE AGENCIES ?

HE'S A NIXON CHINA BRAT

BOYCOTT NIXON'S CHINA

Anti said...

Update:

I just contacted my Senators and the President as well. I also contacted S&P at ratings-request@standardandpoors.com, the email address they gave me, to inform them.

googleheim said...

Hi Anti

I once was invited to a Arthur Andersen company meeting complete with rock bands, enron customers, and more.

I wore the Danish Flag ( huge shirt front and back ) for the call to transparency.

They all went down in a matter of months !!!!

Long live hamlet, king of MMT

Mike Norman said...

Anti,

I'm not sure there's much we can do. If you see the movie, Inside Job, you will see how corrupt the rating agencies really are. And after the crisis, nothing was done to them. They got off scot free. Now they're doing this again. They are totally corrupt, as is the entire economics profession, which has been bought and paid for by Wall Street; hired to do its bidding, which is to further the expansion of the neo-liberal, unregulated, financial sector that destroys everything it touches while at the same time enriching itself beyond imagination.

AP Lerner said...

If long rates back up on this S&P nonsense, this will prove to be the greatest buying opportunity for treasuries in 30 years. We truly are following in Japanese footsteps.

Mike Norman said...

I agree!

Anti said...

Well Mike, I don't see how it can hurt for all of us to spread the suggestion that those who agree contact the government and the rating agencies to let them know we're out to get them.