I have been no fan of the ratings agencies. You can do a simple search for "Ratings Agencies" on this blog and read what I think of them. They are the single biggest reason we had the economic calamity that we had.
http://tradersutra.blogspot.com/2010/05/enabler-from-omaha-speaks.html
http://tradersutra.blogspot.com/2010/02/glass-steagall-was-early-warning-sign.html
http://tradersutra.blogspot.com/2010/02/here-comes-volcker.html
These are just a few of the choice words I have for them.
But......
I give them props (albeit small) for their ballsy call on US Debt. I believe its not a referendum on the ability of the US to pay its debts but a stab at the rotten to the core Political System that has parasitically eaten into the fabric and soul of the country. America pure and simple has become a Kleptocracy wrapped within a Corporatocracy. It is way beyond toxic. Pay Option and ARM Mortgages wrapped in CDO squareds have nothing on Washington DC.
The great irony of the whole situation is that the ratings agencies like I previously stated are the biggest reason we had an economic crisis in the first place. All these guys had to do was say no to Wall Street. But they didn't. All they had to do was their jobs. They didn't. All they had to do was sound credit analysis. They didn't.They happily took the money from the banks in exchange for AAA ratings on crap mortgages. All of these ratings agencies are corrupt to the bone. They should all have been thrown to the wolves AKA bankruptcy court. They should have received the same penalty as Arthur Anderson. AA enabled Enron to commit shenanigans that cost shareholders and citizens billions.
For these reasons no matter what S&P, Fitch, and Moody's do from now on it doesn't matter. They completely wrecked the country. The reason we have huge deficits is because of them and their utter cowardly indifference to any type of ethical behavior.
But I offer them small props for their debt downgrade. Only small props. My reasoning goes like this. They still should get the death penalty and I will gladly flip the switch.
As I previously stated this is more of a downgrade of the political system not the US Treasury. The US Treasury can always pay their debts. Its fundamentally impossible for the government not to pay. The only reason they wouldn't pay is purely technical via hyperinflation, money supply expansion (Money Printing), and basic stupidity of not raising the debt ceiling. The debt ceiling argument was about paying the debts that are already on the books and Congressionally agreed to not about future expenditures. It is Congress that legislated two wars, two tax cuts, one massive bailout, and one absurd Medicare prescription program. All of these actions were to the benefit of the status quo aka business elite.
Then to make matters worse, the idiots in Congress just spend the last two months threatening to technically default on the debt unless a minority of the minority party passed a measure to balance the budget in a balance sheet recession. You simply can't make these things up. We have the holy trinity of nitwits here:
1-Congress
2-Tea Party
3-Obama
Let me be clear. We have a subprime political system in our country and these economic terrorists must be shown the door.
We can hope that S&P's downgrade forces these morons in Congress especially the GOP to take a stand against the Tea Party/Ant Tax Fanatics. We can hope that Democrats who are inept but seem to be competent only compared to Republicans see that entitlement and immigration reform is badly needed and the keystone of any type of long term deficit reduction. The Obama Administration states that S&P had a $2T mistake in their calculation, but the real math mistake is to think that Medicare, SS, and Tax Reform are not central to the argument. When I say tax reform I don't necessarily mean tax increases but more closing tax loopholes.
As we saw today, S&P's downgrade on US Debt is meaningless. Agencies are not the final arbiter of financial asset prices. Its the market that does that. 10 and 30 Year Bonds were flying today because in the midst of a balance sheet recession where there is no aggregate demand the final outcome will always be deflation. It’s clear that the bond market right now is focused on the prospects for global growth and its deteriorating outlook. In terms of the pressure now on DC to step up and address the country’s balance sheet, no amount of taxes will solve our excessive and growing debt obligations, it will only be dealt with thru a change in the trajectory of medicare, medicaid and social security spending. Politicians will have to put aside their constant desire to get reelected and be honest with the American people and the promises that were made and cannot be kept.
Many people just seem to think that Ben Bernanke won't let this market drop further. I say that the reason we are in this mess is because of Ben Bernanke's absurd policy choices. The Fed is almost out of tricks. They cant stimulate demand and credit expansion at zero rates? Yes this is true to anyone who understands what a balance sheet recession is.
It looks to me in the short run that Congress and Obama have no appetite for further debt. The government cannot tax an economy that is so precarious. Cutting federal programs will never occur with our form of tenured elected officials. We have to admit to ourselves that our economy has been hijacked by a kleptocracy. The ills in our economic system will only be addressed if the markets punish the system to force change. I have no faith that our elected officials and government employees can fix the system unless the market incurs punishment first. For this reason only I give props to S&P on their ballsy move.
Now that I have given them props....Please go get your shine box S&P.
http://tradersutra.blogspot.com/2010/05/enabler-from-omaha-speaks.html
http://tradersutra.blogspot.com/2010/02/glass-steagall-was-early-warning-sign.html
http://tradersutra.blogspot.com/2010/02/here-comes-volcker.html
These are just a few of the choice words I have for them.
But......
I give them props (albeit small) for their ballsy call on US Debt. I believe its not a referendum on the ability of the US to pay its debts but a stab at the rotten to the core Political System that has parasitically eaten into the fabric and soul of the country. America pure and simple has become a Kleptocracy wrapped within a Corporatocracy. It is way beyond toxic. Pay Option and ARM Mortgages wrapped in CDO squareds have nothing on Washington DC.
The great irony of the whole situation is that the ratings agencies like I previously stated are the biggest reason we had an economic crisis in the first place. All these guys had to do was say no to Wall Street. But they didn't. All they had to do was their jobs. They didn't. All they had to do was sound credit analysis. They didn't.They happily took the money from the banks in exchange for AAA ratings on crap mortgages. All of these ratings agencies are corrupt to the bone. They should all have been thrown to the wolves AKA bankruptcy court. They should have received the same penalty as Arthur Anderson. AA enabled Enron to commit shenanigans that cost shareholders and citizens billions.
For these reasons no matter what S&P, Fitch, and Moody's do from now on it doesn't matter. They completely wrecked the country. The reason we have huge deficits is because of them and their utter cowardly indifference to any type of ethical behavior.
But I offer them small props for their debt downgrade. Only small props. My reasoning goes like this. They still should get the death penalty and I will gladly flip the switch.
As I previously stated this is more of a downgrade of the political system not the US Treasury. The US Treasury can always pay their debts. Its fundamentally impossible for the government not to pay. The only reason they wouldn't pay is purely technical via hyperinflation, money supply expansion (Money Printing), and basic stupidity of not raising the debt ceiling. The debt ceiling argument was about paying the debts that are already on the books and Congressionally agreed to not about future expenditures. It is Congress that legislated two wars, two tax cuts, one massive bailout, and one absurd Medicare prescription program. All of these actions were to the benefit of the status quo aka business elite.
Then to make matters worse, the idiots in Congress just spend the last two months threatening to technically default on the debt unless a minority of the minority party passed a measure to balance the budget in a balance sheet recession. You simply can't make these things up. We have the holy trinity of nitwits here:
1-Congress
2-Tea Party
3-Obama
Let me be clear. We have a subprime political system in our country and these economic terrorists must be shown the door.
We can hope that S&P's downgrade forces these morons in Congress especially the GOP to take a stand against the Tea Party/Ant Tax Fanatics. We can hope that Democrats who are inept but seem to be competent only compared to Republicans see that entitlement and immigration reform is badly needed and the keystone of any type of long term deficit reduction. The Obama Administration states that S&P had a $2T mistake in their calculation, but the real math mistake is to think that Medicare, SS, and Tax Reform are not central to the argument. When I say tax reform I don't necessarily mean tax increases but more closing tax loopholes.
As we saw today, S&P's downgrade on US Debt is meaningless. Agencies are not the final arbiter of financial asset prices. Its the market that does that. 10 and 30 Year Bonds were flying today because in the midst of a balance sheet recession where there is no aggregate demand the final outcome will always be deflation. It’s clear that the bond market right now is focused on the prospects for global growth and its deteriorating outlook. In terms of the pressure now on DC to step up and address the country’s balance sheet, no amount of taxes will solve our excessive and growing debt obligations, it will only be dealt with thru a change in the trajectory of medicare, medicaid and social security spending. Politicians will have to put aside their constant desire to get reelected and be honest with the American people and the promises that were made and cannot be kept.
Many people just seem to think that Ben Bernanke won't let this market drop further. I say that the reason we are in this mess is because of Ben Bernanke's absurd policy choices. The Fed is almost out of tricks. They cant stimulate demand and credit expansion at zero rates? Yes this is true to anyone who understands what a balance sheet recession is.
It looks to me in the short run that Congress and Obama have no appetite for further debt. The government cannot tax an economy that is so precarious. Cutting federal programs will never occur with our form of tenured elected officials. We have to admit to ourselves that our economy has been hijacked by a kleptocracy. The ills in our economic system will only be addressed if the markets punish the system to force change. I have no faith that our elected officials and government employees can fix the system unless the market incurs punishment first. For this reason only I give props to S&P on their ballsy move.
Now that I have given them props....Please go get your shine box S&P.
No comments:
Post a Comment