The FIX is in!
Check it out.
The same people that caused our recession and economic crisis by:
inflated grades of mortgage-backed investments -- paid for by the banks that created the toxic debt
Have now decided to downgrade the credit rating of USA to AA from AAA. This move has created panic in world markets from Asia to Israel to Europe.
The critics are quick to yell foul:
Standard & Poor’s, the rating company that downgraded the debt of the United States to AA+ from AAA for the first time, now finds itself assailed by investors led by billionaire Warren Buffett for making a political decision that has more to do with Tea Party politics than the financial stability of the U.S.
I am no financial market wiz - and I don't need to be because this was all about politics - but I know game when I see game, and this is game.
This was scorched the earth game. A game when the major players would rather inflict severe pain on our country rather than be healed by the policies of President Obama.
In this game the players want power more than economic stability.
Let's recap this jack move:
1. S&P helped cause the 2008 Economic Meltdown by giving AAA rating to worthless investment packages that were sold to unsuspecting investors in gigantic bundles called hedge funds.
2. These hedge funds, full of delinquent mortgages, went belly up and created a financial crisis that created our Great Recession.
3. Now, this same disgraced, corrupt and fraudulent agency downgrades our credit. Seems to me, they are not happy about causing the Great Recession, they want to create a Great Depression.
S&P is in bed with the GOP/Tea Party and they both want to undermine President Obama and influence the 2012 election; and they don't give a rat's you know what about collateral damage.
I am going to channel my inner Malcolm:
Oh, I say and I say it again, ya been had!
Ya been took!
Ya been hoodwinked!
Bamboozled!
Led astray!
Run amok!
Some people believe in the myth that says "you hit the biggest guy in the crowd if you want a reputation". That might just backfire on you if the big guy is made of concrete. S&P has put its creditabilty on the line, by going after the biggest guy in the crowd, the US. First, their decision was based on a rather large error estimated at over two trillion dollars. The other problem is simply that the US was not late on any payments and have the authority to increase its debt limit. My prediction is that the other two credit agencies will get more creditability from this debacle.
ReplyDeleteThe S&P were right in giving the AAA rating to the mortgage investments that eventually ended up in disaster, due to mismanagement. Those were considered solid investments and actually were from an investor's point of view. Keep in mind that some of the best minds in the world operate on Wall Street. Those mortgages were intended to allow people who were not qualified for conventional loans, to get them. They were only suppose to be temporary and should have been refinanced at a better time. The problem with the sub prime loans is that they were being sold by brokers who were only interested in selling the products to unsuspecting folks, who didn't know what they were getting into. They were sold a low monthly mortgage payment and nothing was ever said about the negative amortization that would result at some point. In other words, the brokers intentionally lied to the public to increase sales and everyone else down the line fell in line. None of this stuff showed up for a couple of years, when the limits on the term of low payments was reached and suddently reality came into play. Many people saw their mortgage payments double in one month. That resulted in the foreclosure crisis we now see still taking place. If the plan had been applied properly, we would not have had the problems that ensued. Keep in mind that these were financial genuses developing these products. They believe in taking risk, because you don't make money on Wall Street by playing it safe. I put all of my children in those sub prime loans, and had them refinanced at the opportune time. They are all in their homes with affordable payments.
I would not go so far as to say that the S&P are in bed with the Tea Party. That would be counter productive for one thing. But the other major flaw in what you are saying is that in their statement about why they lowered the rating. They specifically identified the Tea Party as being the reason for the delay in raising the debt ceiling. In other words, they don't like the Tea Party, and consider them to be clowns with the little understanding of economics. The lowering of the rating is a suggestion to us, to get these clowns out of our business.
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Interesting, unlikely, but could be.
ReplyDelete@Ronald...you say Keep in mind that some of the best minds in the world operate on Wall Street
ReplyDeleteThis best minds or more accurately vultures have manipulated the market for their own narrow vision wallets. They chase maximum short term profit - the next quater - and foresake the big picture. Hence, they are driving our economy of a cliff. Not all are crooks but too many are - fact.
Second, regarding the S&P's relationship with the GOP. Ronald of course they were going to issue harsh words for the Tea Party in their AAA downgrade - it makes them appear to be non-partisan (this is chess not checkers). Don't take my word read the following article printed in the NY Times (and they are not the only ones that have reached this conclusion):
S&P was one of the worst offenders during the Bush admin in selling ratings; Obama admin should have had Justice prosecute this company. He didn't and now based on the actions ongoing throughtout the country, they used this time to do republican bidding and try to totally cripple the Obama reelection. (maybe there are other things going on now at S&P). Play with snakes they will bite you. They want a nice white conservative to help tea party nuts and republicans totally exercise economic control over unions, people of color, and the 95 percent of us that aren't in the rich person's club. Obama was stupid to try to pal around and pacify these people.
Bush, his family and friends along with the strong support of Greenspan raped and pillaged the US economy. The stock market was at 6000 and dropping when Obama took over. No downgrade then. There have been countless passages of debt ceiling legislation at the eleventh hour. S&P's justification was an unmitigated political statement and act. Their threat of further downgrades would make me send the IRS and SEC into their house on Monday.
I have long thought Obama was too conservative, that he pandered to corporate america and generally was too taken up with matters that did not promote the wellbeing of most americans. I didn't understand why he kept going higher each time Boehner demurred. I know understand based on the actions of S&P. He knew they were in the pocket of the republicans and they were going to do this. You see republicans were not surprised, were they?