Topic: 8/8/11 and the big "meh" (Read 3483 times)

No, that's not what I'm saying.  I'm saying the histrionics and media news cycle grabbing that the Tea Party cultivated as part of the "debt ceiling discussion" damaged the market by spooking traders and pushing price levels below their normal trend.  That was the real damage, NOT the S&P rating.  Nobody cares about S&P.  If they did, they wouldn't have bought so many of those downgraded bonds.

NOTE:  we're already back to "pre S&P downgrade" levels.  That's proof of it's "meh" ness.

The debt ceiling has been raised regularly since 1919.  

     http://usgovinfo.about.com/od/federalbudgetprocess/a/US-Debt-Ceiling-History.htm

The Tea Party chose to make it an unreasonable debate.  The "Grand Compromise (GC)" that Obama and Boehner were set to sign would have lowered the debt without SINKING the market.  They (TP) stopped it.  They (TP) are to blame.  The bill that eventually got passed is WORSE than the GC that was slated to pass.

     http://thehill.com/blogs/blog-briefing-room/news/170551-boehner-backing-away-from-grand-compromise-on-debt

What the TP and the media who give them air time fail to recognize is that this really isn't a TV reality show.  It's the economy.  It's government that should be FOR the people.  It's about people's lives.


We're more credit worthy than anyone else.  Scary, but true.


The logic behind that statement is severely flawed:

if (A)
then (B)
does not imply
if (!B)
then (@^$@#%&)

The Tea Party doesn't really advocate anything concrete.  They're like infants babbling nonsense.  They think Evolution is a "theory" and that dinosaurs roamed the earth six thousand years ago.  They are a media branch of the Republican Party, which stands for huge corporate profits.  Smaller government means that corporations (like Enron, Exxon, British Petroleum, Lehman Brothers, etc...) and the like would be free to do whatever they want.  

Are you willing to put your children to work at age 7?  Have you even heard of child labor laws?  How about the EPA?

You may want to re-read your history of Capitalism ... or more likely ... just read it for the first time.  While I wouldn't consider this the best history lesson, it does have the virtue of being free:

     http://en.wikipedia.org/wiki/History_of_capitalism

Hope you enjoy.

Yes, the assumption would've been that there'd be pressure on treasuries. The reality is that algorithmic trading moves funds around and will park them in treasuries by default when other asset classes are declining. Automated trading technologies are not so sophisticated yet as to make much better than well-defined conditional decisions based on economists' assumptions.

As the dollar and equities were falling off a cliff, the money thus moved into treasuries. Once a technical breach occurs, the cascade is triggered. The banks and PPT use this fact to great effect in order to sustain the illusion of success.


That's a very centric perspective. It might be a sin for those in the US to go against the grain, but that does nothing for the rest of the world. An egotist may view himself as hot shit while everyone around him sees right through the boasting and is laughing at his idiocy. America has become a laughing stock, but still carries enough weight to cause damage - a demented madman with an arsenal.

The downgrade theoretically would have caused selling pressure on treasuries.  Instead, there was a ton of U.S. treasury buying!  Record low interest rates, instead of increasing rates.  Who could've predicted that? Last week was a great time to buy undervalued banks and mezzazine debt companies due to the illogical nature of selling pressure.

Since it's unconstitutional to question U.S. debt, and the U.S. has unlimited printing power (the treasury can mint $5t platinum coins even if Congress has a stick up its ass thanks to LibertarianDumbDumbs), I'd agree with Warren Buffett's assessment of U.S. debt as "AAAA".

I think the political element is irrelevant as well - the dog and pony show that entertains and distracts while reckoning is delayed.

A major aspect of the downgrade by S&P could also be that the rating agencies have been in the spotlight recently and in danger of being declared pointless for having waited so long after the obvious to take action. This could have been an effort to regain some semblance of validity in the eyes of the financial community despite being too little, too late.

In doing so, S&P has pissed off government and I have to wonder whether further downgrades of the US among the rating agencies will run the risk of nationalization in some form. As absurd as it sounds, I wouldn't put anything past a desperate politician.

So you're saying that the US credit rating got downgraded due to the one political faction in America that is actually the most vocal about debt reduction? And then you compare the entire faction to a potato - ignoring the probably reality that such a large group is necessarily composed of people from a wide range of intelligence, background, and character?

The US credit rating got downgraded because the US is not credit worthy. It's pretty simple. The downgrade should have happened long ago, actually. The amount of debt carried by the US Federal Government cannot mathematically be paid back without printing the money to do so (which they've already started doing via "quantitative easing").

You seem to suggest that the creditworthiness of the country would be improved if the group advocating for "smaller government, less spending" was gone, thereby leaving more people who support higher spending levels? Perhaps you want to rethink your opinion on this.

http://thinkprogress.org/romm/2011/08/08/290508/michele-bachmann-pledges-to-have-the-epa%e2%80%99s-%e2%80%9cdoors-locked-and-lights-turned-off%e2%80%9d/

Potato indeed.

The fact remains that they were responsible for the "Grand Compromise" not going through.  That led to the panicked deadline and left us where we're at now.  The market would have continued up-and-down but now it's spooked (being something based on mass psychology). 

Nevermind the fact that combined they have an IQ of a potato.

It is a bit ignorant to blame this all on one group imo. The United States has been on this downward spiral way before the Tea Party and will continue if we do not fix out mess even without the tea party. Just my .02

Everything is going to be fine folks.  That was the main point of this post actually.  The markets have moved way more than they needed to in response to basically a non-event.  S&P are a bunch of idiots, we all know that.  Unfortunately, so are many members of congress.

I'm officially changing my donation tag to be 100% devoted to eliminating the tea party.

The more you step on, the smarter the average roaches become...if only this is how it worked in irl...



A nice thought, but trying to drive the main importer of your goods out of business is not in any way, shape or form what they want to do. As others have said, when the US goes down, it's taking the whole world with it, except for lemonginger in his mountain compound fueled by hippy.

I never said meh couldn't move markets.  But in the end it's still meh. 

Nothing has drastically changed economically speaking.  The market is running on fear, not reality.  S&P's rating decision was based on politics.  All they did was hurt the little guy who can't retire this year now because his 401K is worth 25% less than it was a few weeks ago.

Wait ten years from now when you find out about how corrupt and left wing S&P is via some Michael Moore documentary.

Yea I guess it depends where you are invested lol

It was a 'meh' day. At close, gold was up ~3.3%, silver rose ~1.8% and mining stocks were mostly flat (XAU -1.7%, GDX, GDXJ & HUI 0%).

Pretty dull IMO. I slept in

I was expecting a meh day too, maybe a 200 point drop at most. This was absolute carnage and all the money ran straight into securities the very securities that S&P Downgraded. lol

All of that is highly commendable. It's probably better from a long-term economic standpoint than any other investment. Real assets and skills are the way to go.

If you have some extra time, you could learn about options trading. Buying long-dated, far OTM calls and puts for <$1 easily amplifies your gains. When trading options, I find it best to pick a position and a decent entry point, then sit on it for a long time. Especially with precious metals. After that, go outside and live life or do something else to generate income.

Some brokers that don't require minimums (afaik):
Trade King - no minimum deposit or balance.
OptionsXpress - no minimum deposit or balance, but high commission for low-volume traders.
Think or Swim - merged with TD Ameritrade, may require deposit now - not sure.

Interactive Brokers - included just because it's the ideal, but requires a significant min. deposit.

Agreed on the turmoil in London. And people always think it can't happen to them...


I agree, that is the situation... for now

I'm not an institutional investor so I don't own any treasuries.  Little 'ole me has the luxury of keeping dry powder in a bank account.  However, if I needed to own treasuries, yes, I would sleep like a baby.  The market has and continues to assert its confidence in treasuries.  That's not an opinion, that's a fact.  Sentiment can change of course but in its current state the amount of fear you're trying to project compared to what the market is saying is very badly askew.

Greek, Italian and Spanish bonds would probably keep me up at night right now.  US T's, not so much. 

LOL if a 600 single day drop in the Dow is a "meh" day, then you must live in a scary world!

I don't have enough money to do any actual investing - more like playing around.

What money I do have goes into gardening tools, well made clothes, a retrofit of my car to run on waste oil, etc.

If i had enough money to worry about where to put it, I would. But since I don't, I fuck around with BTC, PMs, and inverse ETFs and my real savings is in material things....

---

If today slides into carnage in Asia overnight, there's a good chance of some more juicy action tomorrow.

Oh, and London continues to burn. Get ready for an austerity riot near you soon.

The US does not have time on its side. China doesn't need to sell, it can just stop buying - that's all. The rest will happen by itself. This way, China isn't viewed as a financial aggressor, yet the pressure remains and even increases on the US because it won't be able to expand its funding for debt servicing. It's a bit like watching your opponent drown while you're holding a life ring.


Can you sleep at night holding US treasuries? Fear is a tool for herding pigs and sheep toward their slaughter. Buy blood, don't chase a comet's tail.

I choose gold, silver and Bitcoin with a sprinkling of solid, dividend-paying stock in global powerhouse companies (nibbling at some juicy discounts today). Just a suggestion. I sleep very well.

Yup.  The Treasury was downgraded by S&P but Europe may be on the brink of sovereign default.  The US is still going to be the safe haven of choice for the fearful.