Financial Crisis

[powderpuff]

VIX up 19.65% today. Whatever it takes to get rid of the young president is ok with me.

[flying]

Most probably saw the result of the S&P downgrade today in the US markets

S&P Affirms US AAA Rating, Cuts Outlook to Negative

Published: Monday, 18 Apr 2011 | 10:43 AM ET

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By: Reuters with CNBC.com

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Standard & Poor's on Monday downgraded the outlook for the United States to negative, saying it believes there's a risk U.S. policymakers may not reach agreement on how to address the country's long-term fiscal pressures.

"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," the agency said in a statement.

In an interview with CNBC, David Beers, S&P's global head of sovereign ratings, said the agency has been "struck increasingly by the difference in how other governments are dealing with fiscal consolidation."

"The U.S. to us looks to be an increasing outlier in that context," Beers added.

Rival ratings agencies Fitch and Moody's [MCO 35.50 -0.36 (-1%) ]maintained their respective outlooks on the United States, according to statements made to CNBC.

"Moody’s is not reacting to S&P's move. Moody’s outlook for the US Aaa rating remains stable," Moody's spokesman Eduardo Barker said in an email.

The Dow Jones industrial average tumbled more than 200 points on word of the revision, while gold prices hit a new record above $1,496 an ouncebefore paring some gains. The dollar index moved higher in New York trade.

The S&P said the move signals there's at least a one-in-three likelihood that it could lower its long-term rating on the United States within two years.

The Worst Hyperinflation Situations of All Time

In an interview with CNBC, Austan Goolsbee, chairman of the Council of Economic Advisers, characterized the S&P move as a "political judgement."

"What the S&P is doing is making a political judgement and it's one we don't agree with, and it appeared to me that Moody's and some others don't agree with that judgement," Goolsbee said.

The U.S. Treasury also voiced disagreement with the S&P revision.

"...We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," Treasury Assistant Secretary Mary Miller said in a statement.

The last time the United States was placed on a negative watch was in January 1996. Moody's made the call at that time, after congressional Republicans refused a vote on the U.S. debt ceiling, a topic that is once again at the center of debate in Washington.

Earlier this month, U.S. Treasury Secretary Timothy Geithner told Congress that a failure to raise the U.S. debt ceiling would touch off a "financial crisis potentially more severe than the crisis from which we are only starting to recover."

end.

[Naam]

Most probably saw the result of the S&P downgrade today in the US markets

i thought Fitch will be the first and was really surprised that S&P dared!

[ianguygil]

Whatever your politics (and this is from a highly partisan site) this is an interesting graph :jap:

[Naam]

Whatever your politics (and this is from a highly partisan site) this is an interesting graph :jap:

debt/gdp ratio is suitable to BS amateurs. professionals look at the only ratio that counts and that is debt/revenue.

[ianguygil]

Whatever your politics (and this is from a highly partisan site) this is an interesting graph :jap:

debt/gdp ratio is suitable to BS amateurs. professionals look at the only ratio that counts and that is debt/revenue.

And without responding to the unncessary insults, here is another pertinent chart. Also, given that debt is created by a mismatch between revenue and spending there is at least a partial correlation between revenue and debt

Edited April 19, 2011 by ianguygil

[ianguygil]

This is actually a better chart to compare to the first one I posted. Thanks

[flying]

I liked the one in post 9036

very sobering...shocking actually

Thanks

[cloudhopper]

I'd like to see -

Total Outstanding Debt/Total Existing Money

In the world.

[churchill]

I'd like to see -

Total Outstanding Debt/Total Existing Money

In the world.

Hear hear .

[Naam]

And without responding to the unncessary insults, here is another pertinent chart. Also, given that debt is created by a mismatch between revenue and spending there is at least a partial correlation between revenue and debt

that no insult was intended should be clear because i used amateurS (plural). and yes, this chart speaks a clear language. unfortunately most of the amateurs will not understand because they have their heads filled with not only irrelevant but misleading figures/numbers such as xxx/, yyy/ and zzz/per capita.

an even better picture than revenue/debt is presented if revenue/debt service is used.

[Naam]

I liked the one in post 9036

very sobering...shocking actually Thanks

surprise, surprise Flying when you look at those "bankrupt €URopean PIGS"?

[Naam]

I'd like to see -

Total Outstanding Debt/Total Existing Money

In the world.

and then?

[churchill]

I'd like to see -

Total Outstanding Debt/Total Existing Money

In the world.

and then?

Get some pigs ?

Gambles thinks Thailand should LOWER interest rates

Subsidising instability

'So, to fight fire with fire, Thai policymakers should focus on temporarily controlling prices and on placing more cash into the pockets of lower-income earners. Interest rates should be lowered, not raised, as Thailand needs to support growth but control inflation.

Structural inflation remains subdued on a global level. The temporary flood of liquidity will almost certainly dissipate. Therefore this is one of those very rare occasions when subsidies and spending checks combined with price controls are justified. When you're being manipulated, it's permissible to push back and do some manipulating of your own. However, a fine balance must be maintained to prevent the creation of long-term economic inefficiencies. This is a big ask from the authorities. So far Finance Minister Korn Chatikavanij and his team appear to have risen to the task. '

http://www.nationmultimedia.com/home/Subsidising-instability-30153335.html

[12DrinkMore]

Oh jeeeeze! What the <deleted> is this, that popped up on Bloomberg?

Cameron Says Brown Might Not Be 'Most Appropriate' IMF Head

http://www.bloomberg...ke-imf-job.html

So the self-acclaimed Saviour of the Universe fancies himself heading up the IMF? No, please, no, no, no. Why can't he just retire to outer Dunfermline and wear a kilt?

Ben "won't let it happen" just ain't doing to well on the house price deflation.

The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the Great Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real estate information company.

http://www.bloomberg...ses-appeal.html

Freddie, Fanny and Ben with his MBS toxicity level running high must be getting a bit frustrated with the lack of suckers coming into the market; even with interest rates at almost zero there are just very few takers.

Edited April 19, 2011 by 12DrinkMore

[flying]

I liked the one in post 9036

very sobering...shocking actually Thanks

surprise, surprise Flying when you look at those "bankrupt €URopean PIGS"?

:lol: Well I should not be surprised but.... as usual the US yells looks at that

so we dont look at this

[ronz28]

Most probably saw the result of the S&P downgrade today in the US markets

i thought Fitch will be the first and was really surprised that S&P dared!

China’s Dagong Global Credit Rating Co. was first, but no impact...

http://www.bloomberg.com/news/2010-11-09/china-s-dagong-downgrades-u-s-to-a-on-quantitative-easing-xinhua-says.html

[cloudhopper]

Gambles thinks Thailand should LOWER interest rates

Right diagnosis but wrong Rx IMO. If Thailand stopped printing Baht in order to keep a stable exchange rate with the failing USD they would find the costs in THB of these imports dropping. Won't happen though it's a global race to the bottom.

[ianguygil]

And without responding to the unncessary insults, here is another pertinent chart. Also, given that debt is created by a mismatch between revenue and spending there is at least a partial correlation between revenue and debt

that no insult was intended should be clear because i used amateurS (plural). and yes, this chart speaks a clear language. unfortunately most of the amateurs will not understand because they have their heads filled with not only irrelevant but misleading figures/numbers such as xxx/, yyy/ and zzz/per capita.

an even better picture than revenue/debt is presented if revenue/debt service is used.

One of the biggest problems not mentioned for the USA is the average maturity of US debt. In order to take advantage of almost zero short term interest rates the US has a very short average maturity for their debt (although this has increased a little in the past year which shows some understanding of the problem). Such a short average maturity means they have to issue more debt each year to facilitate the current deficit and the refinancing of existing debt which is rolling over. The UK has an average debt maturity of nearly 3 times that of the USA which gives them some breathing room, even though in general their economy is a mess. Japan also has a lot of short term debt and even higher financing needs as a percentage of GDP, but they are self funding because the actually save. Here is a link to a very current (this month) document from the IMF on the needs for fiscal adjustments in the global economy.

http://www.imf.org/e.../pdf/fm1101.pdf

Edited April 20, 2011 by ianguygil

[12DrinkMore]

Right diagnosis but wrong Rx IMO. If Thailand stopped printing Baht in order to keep a stable exchange rate with the failing USD they would find the costs in THB of these imports dropping. Won't happen though it's a global race to the bottom.

Wrong answer.

Thailand has just raised rates. And Asia will now let their currencies gain against the western bits of bullshit QE'd and ZIRP'd crap.

The global rebalancing is happening.

We just need to have a swing of confidence that when the Asian currencies appreciate, import costs will fall and output will continue at the same or increasing level. IMO Asians will be able to buy their own produce and the west will have to pay more for the goods made in Asia, which are pretty much everything the west buys outside of their precious real estate.

[midas]

Jasmine revolution in China ?

http://www.stratfor.com/analysis/20110420-dispatch-truckers-strike-shanghai

Edited April 21, 2011 by midas

[flying]

Just wondering lately here in the USA

What do we call this inflation/deflation ?

While we see the cost of food going nuts...

(I dont care what they said in the general topic section of this forum about food costing less in the US than LOS..it is just not true)

Gas going up fast...I know this is worldwide

Common goods like even shaving blades is now $13 USD for 4 blades, paper products, grains, commodities

& on & on & on it is quite obvious inflation is taking hold.

Yet on the other hand prices on houses, cars, land, dropping like stones.

Wages are stationary or dropping in cases where folks without work find work for less pay.

So what is this called then? Is it possible to have inflation & deflation at the same time?

Has it happened before?

Just curious..... Opinions?

[churchill]

Just wondering lately here in the USA

What do we call this inflation/deflation ?

While we see the cost of food going nuts...

(I dont care what they said in the general topic section of this forum about food costing less in the US than LOS..it is just not true)

Gas going up fast...I know this is worldwide

Common goods like even shaving blades is now $13 USD for 4 blades, paper products, grains, commodities

& on & on & on it is quite obvious inflation is taking hold.

Yet on the other hand prices on houses, cars, land, dropping like stones.

Wages are stationary or dropping in cases where folks without work find work for less pay.

So what is this called then? Is it possible to have inflation & deflation at the same time?

Has it happened before?

Just curious..... Opinions?

Stagflation - The worst of both worlds /

Global stagflation is here to stay

http://finance.fortune.cnn.com/2011/03/04/global-stagflation-is-here-to-stay/

China monetary-policy tools fooling no one

Commentary: Economy heading toward stagflation, instability

http://www.marketwatch.com/story/china-headed-toward-stagflation-instability-2011-04-13

Edited April 21, 2011 by churchill

[midas]

Just wondering lately here in the USA

What do we call this inflation/deflation ?

While we see the cost of food going nuts...

(I dont care what they said in the general topic section of this forum about food costing less in the US than LOS..it is just not true)

Gas going up fast...I know this is worldwide

Common goods like even shaving blades is now $13 USD for 4 blades, paper products, grains, commodities

& on & on & on it is quite obvious inflation is taking hold.

Yet on the other hand prices on houses, cars, land, dropping like stones.

Wages are stationary or dropping in cases where folks without work find work for less pay.

So what is this called then? Is it possible to have inflation & deflation at the same time?

Has it happened before?

Just curious..... Opinions?

Stagflation - The worst of both worlds /

Global stagflation is here to stay

http://finance.fortune.cnn.com/2011/03/04/global-stagflation-is-here-to-stay/

China monetary-policy tools fooling no one

Commentary: Economy heading toward stagflation, instability

http://www.marketwatch.com/story/china-headed-toward-stagflation-instability-2011-04-13

I was wondering if we will see the same thing here as in China

because Thailand's Oil Fund is almost of out money. And just in

time for the elections so the poorer people will feel this

Diesel subsidies cannot last, but will the govt appease voters?

http://www.nationmultimedia.com/2011/04/09/opinion/Diesel-subsidies-cannot-last-but-will-the-govt-app-30152841.html

[flying]

Stagflation - The worst of both worlds /

I had thought of that but always thought Stagflation was just inflation during a recession

(overly simplified I'm sure) Although I know stagflation is also described as fast rising commodities along with money supply so that does fit at one end. (even if the claim is the money supply has not been increased )

But I am seeing inflation on the prices of goods/consumables

& decreasing prices in the harder assets (land etc.) & services

Strange times & if nothing else will be interesting to see where its all going.

[Naam]

Common goods like even shaving blades is now $13 USD for 4 blades

24k gold?

[flying]

Common goods like even shaving blades is now $13 USD for 4 blades

24k gold?

I wish

I would buy the 10 pack then

These are just Gillette Mach3 Cartridges

PS: I did make a typo in my last post

The pack has 5 blades but still...$13????

Use to be $7

Edited April 21, 2011 by flying

[Naam]

These are just Gillette Mach3 Cartridges

i wish i had enough money to afford that kind of luxury

[flying]

These are just Gillette Mach3 Cartridges

i wish i had enough money to afford that kind of luxury

I know it is not a matter of money

When I was in LOS I could not find good blades period

Was also surprised at how expensive shaving gel was

I guess Thai's either dont need it or use soap?

[midas]

These are just Gillette Mach3 Cartridges

i wish i had enough money to afford that kind of luxury

Jamie said the same thing