Based on a second-hand rumor that a big hedge fund’s position is getting liquidated because of margin calls. With gold at a new record we’ll guess not. Krugman himself allows that he’d like/hope for this to be the case on account of that BusinessWeek article that implied Paulson might be smarter than him from over a year ago.
Archive for August 2011
Remember when the Treasury bailed out AIG and the bailout money was funneled to foreign and/or mollusk counterparties and everyone freaked out? Those were good times. Less good for banks is today, when, in addition to the world ending, AIG started to sue to get some of that money back. Continue reading »
CNBC helpfully reminds us that the S&P is on track for the worst 6-day August start since ever, and the worst single day since December 2008. What kind of records will we be setting this afternoon? Continue reading »
Have you had it with this place? Do you want to get out of here and by here we mean not only Wall Street but, like, the Northern Hemisphere/your life/your gender/an existence that closely resembles hell/etc? If your idea of change is “taking some time off to travel” or “figuring out what I really want to do,” let us stop you right now- our time is precious and you’re wasting it. Alternatively, if your idea of change is drinking goat blood and then vomiting it back up, we can help. Continue reading »
“It seems to me it’s physically, humanly impossible for the U.S. to ever pay off its debt ,” Rogers said. “They can roll it over and continue to play the charade, but the U.S. is bankrupt.” [CNBC]
We assume that you, like everyone else, have been madly dumping Treasuries now that S&P has downgraded them. Smart! And presumably in your flight to safety you’ve been buying AAA rated corporate bonds, from let’s say XOM or MSFT. Which are obviously safer than Treasuries because, while sure the U.S. Treasury can print dollars and Microsoft and Exxon can’t, Microsoft can always send out a secret electronic signal that makes your Windows crash 100% of the time instead of the steady-state 20%, which will force you to upgrade to the next version, which is pretty much the next best thing to printing money. And if XOM is short on cash it can just start a war in the Middle East (that’s how it works right?).
So you think you’re in pretty good shape right? Not so fast – your shit is still really AA+.
The problem is that S&P this morning downgraded Depository Trust Company to AA+ in sympathy with the sovereign downgrade:
Continue reading »
Lowering Fed Interest On Deposits Could Lead To Economic Growth And/Or Elderly Ladies Being Assaulted On The Street
By Matt Levine
Last week we learned that robbing a bank is as easy finding a Sharpie and drawing yourself a beard. Today we find out courtesy of JPMorgan that not only is it extremely easy to pull off but banks want you to take the money off their hands. Continue reading »
As you may have heard, Standard and Poor’s knocked the US’s debt down to double-A plus from triple-A Friday evening. Several hours before it was made official, the ratings agency was notified their team had made some calculation errors but chose to say “fuck it, on with the downgrade.” This made a whole bunch of people very upset, including Treasury Secretary Tim Geithner, who commented S&P demonstrated “really terrible judgement, handled themselves poorly, showed a stunning lack of knowledge about basic US fiscal budget math, and…came to exactly the wrong conclusion” and Warren Buffett, who shared that he could not give less of a rat’s ass what S&P thinks, that he’s “not changing his mind about Treasurys based on the downgrade,” that “if anything, it may change my opinion on S&P,” and that the United States’s debt is like that of the first buxon milkmaid he laid his eyes on 70 years ago today- her tits may be down on the ground now but they’ll always be triple-A rated in his mind and that’s all that matters.
A slightly different reaction came from PIMCO CEO Bill Gross. He loved the downgrade and if we’re being really honest? It earned S&P some respect in his eyes, ’cause it showed the ratings agency has balls. Continue reading »
Obama And S&P Vie For Credibility (WSJ)
White House aides say President Barack Obama views the decision as unjustified, contending that it was based on a flawed process, a message he intends to convey to Americans in coming days. Officials worked the phones and made numerous calls to a range of investors “to mitigate any short-term negative impact,” a Treasury official said. They also issued a series of public statements aiming to undercut S&P’s analysis, trumpeting a dramatic, last-minute, $2 trillion snafu in the firm’s calculations. S&P officials, meanwhile, took to a rare Saturday conference call and the Sunday morning political talk shows to establish their bona fides, defending their analysis and saying that the prolonged and near-disastrous conclusion of the debt-ceiling talks called into question Washington’s ability to function.
Geithner: S&P Downgrade Showed Terrible Judgement (AP)
“I think S&P has shown really terrible judgement and they’ve handled themselves poorly, and they have shown a stunning lack of knowledge about basic US fiscal budget math, and I think they came to exactly the wrong conclusion,” Geithner said in an interview with NBC News.
G-7 Seeks To Calm Investor Fear After World Stock Sell-Off (Bloomberg)
G-7 finance ministers and central bank governors pledged in a statement to “take all necessary measures to support financial stability and growth.” Officials will inject liquidity and act against disorderly currency moves as needed, they said after a call late yesterday European time. The G-20, which includes emerging markets, issued a similar communique.
Bank of America: S&P May Downgrade US Again in November (CNBC)
“We do expect further downgrades,” said Ethan Harris, North American economist, on the call. “We doubt the newly appointed bipartisan commission will come up with a credible long-term deficit reduction plan. Hence by November or December we would not be surprised to see S&P downgrade the debt again from AA-plus to AA.”
Moody’s Says US Needs To Find More Deficit Cuts (Reuters)
“For the Aaa rating to remain in place, we would look for further measures that would result in the ratio of federal government debt to GDP, for example, peaking not far above the projected 2012 level of near 75 percent by the middle of the decade and then declining over the longer term,” Moody’s analyst Steven Hess wrote in a report.
Geithner Tells Obama He Will Remain As Treasury Secretary (Bloomberg)
Geithner, the last remaining member of President Barack Obama’s original economic team, will continue at least through the 2012 election. Continue reading »
