90 seconds at 9 am with BNZ: S&P 500 down 6.6%, Dow falls 634 pts as panic grips global markets after US credit rating downgrade

No no no - it's not happening. I read all the NZ bank economists reports.  Growth is coming at 5 - 6% in NZ ,  and Nz is uncoupled now so we are powering upwards on our own. 

Got Wolly's spot!  

"Despite the downgrade of their creditworthiness, US Treasury bonds rallied sharply as investors desperate for safe havens raced to the safest thing they knew. Prices rose and yields fell to record lows. The 2 year Treasury yield fell to 0.23%."

That about sums it up: No one with money on the table is worried about the solvency of the US government.

The same thing happened when Moody's began downgrading Japan's 'credit' rating:

"In November 1998, the day after the Japanese Government announced a large-scale fiscal stimulus to its ailing economy, Moody’s Investors Service began the first of a series of downgradings of the Japanese Government’s yen-denominated bonds, by taking the Aaa rating away. The next major Moody’s downgrade occurred on September 8, 2000.

Then, in December 2001, Moody’s further downgraded the Japan Governments yen-denominated bond rating to Aa3 from Aa2. On May 31, 2002, Moody’s Investors Service cut Japan’s long-term credit rating by a further two grades to A2, or below that given to Botswana, Chile and Hungary.

In a statement at the time, Moody’s said that its decision “reflects the conclusion that the Japanese government’s current and anticipated economic policies will be insufficient to prevent continued deterioration in Japan’s domestic debt position … Japan’s general government indebtedness, however measured, will approach levels unprecedented in the postwar era in the developed world, and as such Japan will be entering ‘uncharted territory’.”

The then Japanese Finance Minister responded (with some foresight):

They’re doing it for business. Just because they do such things we won’t change our policies … The market doesn’t seem to be paying attention.

Indeed, the Government continued to have no problems finding buyers for their debt, which is all yen-denominated and sold mainly to domestic investors.

In the New York Times (July 6, 2002) the logic of the rating decision was questioned:

How … could a country that receives foreign aid from Japan have a better rating than Japan itself? Japan, with an economy almost 1,000 times the size of Botswana’s, has the world’s largest foreign reserves, $446 billion; the world’s largest domestic savings, $11.4 trillion; and about $1 trillion in overseas investments. And 95 percent of the debt is held by Japanese people …

Former Moody’s President, John Bohn Jr. had in 1995 claimed that: “We’re in the integrity business: People pay us to be objective, to be independent and to forcefully tell it like it is.” (Reference: Ratings Trouble, Institutional Investor, October 1995: 245).

Later the agencies were forced to admit to the US Congress (at the height of the recent crisis) that they took money from firms in return for their AAA corporate rating. Many of the products the agencies gave top ratings to collapsed as worthless assets in the crisis. The agencies are one of the greatest cons around and can never be considered independent."

And still Obama tries to talk it up, but Tuesday will be just as bad, the chickens are coming home to roost ...... Or is that roast?

The most vulnerable sector, globally, is the banking sector.

Now we are going to see just how "real " their balance sheets are.

It ain't going to be pretty.

John Key is looking more and more like a dinasour.....  he still views the world with a very old paradigm.

Looking forward to see how Key handles some genuine social disquiet / strife. He's a money man, I doubt he has the chops for it.

"We’ll be back in surplus in two or three years’ time".

o rly?

s&p clearly have a history of being full of shit, as do the other agencies.......i wonder what made them break rank with the others?

simple really, we are told what the poeple who govern us want us to believe, sucker all of us who believe the unbelievable.

the US is going to print a shit load more money, not because they believe it will work, but because they have no other options, unless they face up to the real facts and tell the poeple what they dont want to here or believe. 

Bank of America down 20%...., other US banks down 9%.....

All the big chemical companies down 6 to 11%...

UK banks not to bad, but wait until tonight...

:/

regards

 on a positive note the US has amazing power to investigate financail tranaction's, they will leave no stone unturned investigating the individual poeple and families invovled in the s&p decision to downgrade the US rating. Dont forget the dow had a surprizing drop of 500 point's 2 day's before the officail announcment.

the US will do anything to discredit this decision and it will be no surprise if they find plenty. 

Last nights Closeup was brilliant. Does Mark Wheldon realise how self interested he comes across? He has no critical analysis other than to talk up how resilient the NZ market is, how the NZ market would be the best investment and by the way, compulsory Kiwisaver would be great so I can make some more money clipping the ticket... Brilliant, he is obviously NZ's best and brightest.

Well I picked 1000 point fall on the Dow today, so I was a little bit off. Still going to call below 10000 for the Dow by the end of the week. Will be interested to see what knee jerk reactions we get from governments to stabilise the markets, the speculators are calling out for QEIII to make all their problems go away. If you recall the Dow was around 10000 about May-June last year, so really all we had was a QE inflated bubble of speculative money.

it is a shame though.....i mean if we must have a global superpower i'd rather it was the usa than china, but they've had decades of washington disfunction and it's really screwed them. 

unfortunately if this is what it takes to unplug the vampire squid, then so be it.

that said, i bet the squid has somehow shorted all this and will make even more money...

US corporates heading back to the taxpayer teet. Freddie Mac to ask for an additional US$1.5 billion from US taxpayers due to losses stemming from the weak housing market. - http://www.reuters.com/article/2011/08/08/us-financial-freddiemac-idUST…

Double dip time?

http://advisorperspectives.com/dshort/updates/Gasoline-Update.php

Good Morning Chaps and Chapesses,

I hope everyone is feeling rather jolly this morning.

I must say I am, as this transfer of wealth plan,  me and my ol' boy network have in place is doing remarkably well, damn fine in fact !

I was just speaking to my broker in Manhattan and we are currently "shorting" the market .... some excellent transactions to be had out there. All with a great cash flow for moi !! ... and that is what is most important, remember :)

I do say the lads at S&P did a remarkable job of "spooking" the market. My connections in Europe and the Hamptons were most pleased, as was I.

Anyway must fly, have to catch the 11 to Honolulu ....must say they do a remarkable hearty breakfast at the Koru Lounge .... thank you Rob.

toodle pip

And London is being burned and looted. Read the riot act. Send in the army with orders to shoot stone throwers, fire bombers and looters.

Seeing a comment that this might be ***just*** one or two very large hedge fund(s)  selling off...

http://brontecapital.blogspot.com/2011/08/who-has-got-margin-call.html?…

regards

The funny thing is I don't feel any panic, should I? Lol

All it will take is a whiff of a rumour about QEII and we could see the markets rocket up in a jiffy. It's crazy that they downgrade the USA, and not the UK, France, and Italy etc when all those other countries have a far worse debt-to-GDP ratio than the USA.

It will be interesting to see if this is a 'panic' which will resolve itself at the end of the year or the resumption of a bear market.

If the yields on US 10 year bonds fell overnight , i.e. the bonds went up in value , not down , then this correction has nothing to do with uncertainty over the US credit rating .

.. Sure , S&P kicked the correction off , with their bizarre report ( a little matter of a $US 2 trillion error they made in that report , too , to support their argument  ...... oooops ! )

But really , this market correction is connected to pessimistic views of the US economy , for the months & years ahead .

... And as the " baby is being thrown out with the bathwater " , as they say , this is a golden opportunity for investors to scour the world's stockmarkets , and to pick up bargains in those jurisdictions where financial commonsense prevail ( basically ,  not in the EU , nor in America , or Venezuela  ) .

Yipppppeeeeeeeeeeeee ! ...... " Pig-out "  time for the Gummster , hoo yeah , baby !!!

October 2011 is the 10th anniversary of the invasion of Afghanistan and the beginning of the 2012 federal austerity budget. It is time to light the spark that sets off a true democratic, nonviolent transition to a world in which people are freed to create just and sustainable solutions. 

http://www.youtube.com/watch?v=SaCufTW9ID4 

Go out and snap up those KFC and McD shares.  The only thing that soothes the soul at this time is the junk food!

Well given the rout on the New Zealand share market this morning, it is quite clear that genuine panic selling has set in. Some good buying will be appearing soon at this rate for those with cash!   

 Well I hope all you guys have made a small fortune " putting your money where your mouth is "  by shorting the market.