Category: Credit Crisis 2011
The analysis published under this category are as follows.
Tuesday, August 09, 2011
S&P’s Downgrade of U.S. Sovereign Debt – Some People Actually Pay Them for these Opinions? / Interest-Rates / Credit Crisis 2011
By: Paul_L_Kasriel
S&P stated the obvious after the U.S. markets closed on August 5 – the projected growth in U.S. public debt is on a long-term unsustainable path. Rather than paying S&P for this opinion, all you need to do is look at some past CBO projections and you would have arrived at the same opinion years ago. For example, in December 2007, CBO published the chart immediately below showing its projections of U.S. public debt held by the public as a percent of nominal GDP under two scenarios. The first scenario, the “extended-baseline” scenario, assumed that the federal spending and revenue budgetary legislation that was on the books as fiscal 2007 would prevail over the next 75 years.
Monday, August 08, 2011
S&P U.S.Debt Downgrade, Don't Shoot the Messenger / Interest-Rates / Credit Crisis 2011
By: Axel_Merk
Don't shoot the messenger. The downgrade of U.S. government debt by S&P is the result of policies pursued over many years that rely on the U.S. being the world's reserve currency. Policy makers have forgotten that the status must be earned; it's not a birthright.
Monday, August 08, 2011
El-Erian: U.S. Very, Very Long Way from Debt Default Risk / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Mohamed El-Erian, co-CEO of PIMCO, spoke to Bloomberg Television’s Betty Liu and Erik Schatzker this morning regarding the S&P downgrade and its impact on the markets and economy.
El-Erian said that the S&P downgrade is perhaps not yet the “Sputnik moment” and that the costs and risks of any new QE have gone up. Excerpts from the interview ca be found below, courtesy of Bloomberg Television
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Monday, August 08, 2011
When Risk-Free Becomes Risk-Certain, Repercussions of the S&P Announcement / Interest-Rates / Credit Crisis 2011
By: Jeff_Berwick
Late Friday evening, Standard and Poor's was the first US credit ratings agency to actually whisper that, possibly, the emperor has no clothes.
The emperor, in fact, has been standing there naked for years. All one has to do is look at the growth in US Government debt and that fact is clear.
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Monday, August 08, 2011
Bill Gross of PIMCO on U.S. Debt Downgrade / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Bill Gross, who runs the world's biggest bond mutual fund at Pacific Investment Management Co., appeared on Bloomberg Television's "Downgrade: A Special Report" live Sunday night special with Bloomberg's Tom Keene. Gross said the U.S. has "enormous" problems and that the dollar is vulnerable. He also said “his hat is off” to S&P for “demonstrating some spin.”
Monday, August 08, 2011
U.S. Credit Rating Downgrade, We Are Not AAA / Interest-Rates / Credit Crisis 2011
By: Vitaliy_Katsenelson
I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper. I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term impact on the market), and political (will it change anything in Washington DC?).
Monday, August 08, 2011
The U.S. Should Downgrade S&P / Interest-Rates / Credit Crisis 2011
By: EconMatters
The biggest news last week (other than the $2.5-trillion that got wiped off global stock markets) is that Standard & Poor’s made good on its tough talk and downgraded the United States long-term credit rating one notch from AAA to AA+. S&P also has kept the outlook at “negative” meaning the U.S. has little chance of regaining the top rating in the near term.
Sunday, August 07, 2011
U.S. Downgrades S&P / Interest-Rates / Credit Crisis 2011
By: Brady_Willett
U.S. Treasury Securities are no longer risk-free. This news comes after Standard and Poor’s cut the triple-A rating it has awarded the U.S. since 1941 (Moody’s has been in the AAA camp since 1917). Given the U.S.’s status as the world’s reserve currency printer – not to mention the safe haven flows arriving in the U.S. due to the recent upheaval in Euroland - the immediate impact of the downgrade is highly uncertain. However, what can be said is that should Moody’s or Fitch also cut, capital may be required to exit U.S. debt due to restrictive ownership covenants. This ominous prospect could quickly come into play should another financial crisis arise and/or the U.S. economy slip back into recession. After all, Moody’s warned last week that it may cut if lawmakers do not enact larger debt reduction plans (an increasingly difficult undertaking with the markets and economy weakening), and Fitch is set to complete its U.S. ratings review by the end of August.
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Wednesday, August 03, 2011
Helicopter Ben Prepares Fed's Next Flyover, Don't Let this Clown Steal Your Money / Stock-Markets / Credit Crisis 2011
By: Money_Morning
Martin Hutchinson writes:
The circus known as the debt-ceiling debate may have left town - at least for the time being - but there's still one sad clown left standing squarely in the center of the ring.
I'm talking about U.S. Federal Reserve Chairman Ben S. Bernanke - otherwise known as "Helicopter Ben."
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Monday, July 25, 2011
U.S. Political Leaders Playing Dangerous Game with Nation’s Debt Rating / Interest-Rates / Credit Crisis 2011
By: Chris_Ciovacco
Leaders from both parties in Washington are playing a dangerous political game with the nation’s AAA credit rating. The first self-imposed deadline of July 22 to have a framework of a debt-ceiling deal in place has already passed. The second and firmer deadline of August 2 is a little more than a week away. Despite Standard and Poor’s warnings of a possible debt downgrade if realistic deficit-reduction plans are not agreed upon, the Wall Street Journal included the following in their update from Sunday night:
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Saturday, July 23, 2011
Trouble Brewing In Credit Markets / Interest-Rates / Credit Crisis 2011
By: Tony_Pallotta
Credit markets continue to signal either a weakening economy or outright recession yet equities refuse to pay attention. With daily market volume dominated by intraday traders with no concern about macro data this comes as no surprise. The danger becomes that equity markets have no ability at forecasting any longer. The Great Recession saw equities peak just two months before contraction began. We may in fact be watching the same horrific forecasting ability play out if the credit markets are accurate.
Tuesday, July 19, 2011
European Bank Stress Test: "It's not that 8 failed...but that 82 passed!!" / Stock-Markets / Credit Crisis 2011
By: EWI
The European Banking Authority announced Friday that 8 banks had failed their stress tests and 16 more had narrowly passed. But the results drew much criticism from analysts, who said that the stress test is not strict enough.
Indeed, this is something that European Financial Forecast readers have known since the first stress test last summer.
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Monday, July 18, 2011
Why Banks Aren’t Lending: The Silent Liquidity Squeeze / Economics / Credit Crisis 2011
By: Ellen_Brown
Why aren’t banks lending to local businesses? The Fed’s decision to pay interest on $1.6 trillion in “excess” reserves is a chief suspect.
Where did all the jobs go? Small and medium-sized businesses are the major source of new job creation, and they are not hiring. Startup businesses, which contribute a fifth of the nation’s new jobs, often can’t even get off the ground. Why?
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Monday, July 18, 2011
Global Economic Crisis: Finance Is the New Mode of Warfare / Politics / Credit Crisis 2011
By: Michael_Hudson
“When I was in Norway earlier this year, one of its politicians sat next to me at a dinner and said, “You know, there’s one good thing that President Obama has done that we never anticipated in Europe. He’s shown the Europeans that we can never depend on America again. No matter how good he sounds, no matter what he promises, we’re never again going to believe the patter talk of an American President. Mr. Obama has cured us. Our problem is what to do about the American people that don’t realize this nightmare that they’ve created, this smooth-talking American Tony Blair in the White House.”
Friday, July 15, 2011
Moody's Warning Edges U.S. Credit Rating Closer to Downgrade / Interest-Rates / Credit Crisis 2011
By: Money_Morning
David Zeiler writes: With time running out on a deal to raise the U.S. debt ceiling, Moody's Investors Service turned up the heat by warning Washington's bickering politicians that any missed debt payments will result in a credit rating downgrade.
Such a downgrade would have economically catastrophic consequences, roiling stock markets worldwide, sharply increasing borrowing costs for the U.S. government as well as businesses, and derailing an already-anemic economic recovery.
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Wednesday, July 13, 2011
Europe and America are Financially Burning / Politics / Credit Crisis 2011
By: Bob_Chapman
Markets are what they are today because that is the way government wants them. The stock market has stayed up for quite some time, but the best earnings are fading. The Street is well aware of what has been happening for a number of years. They just do not say anything and go along with the program. They have come to overlook situations worldwide as well as in America, because they believe that, “The President’s Working Group on Financial Markets” won’t let the market fall.
Wednesday, July 13, 2011
The Hunt for Eurozone's Own Lehman Bros That Could Trigger Financial Armageddon / Stock-Markets / Credit Crisis 2011
By: Money_Morning
Keith Fitz-Gerald writes:
Does the Eurozone have its own American International Group Inc. (NYSE: AIG), or worse, its own Lehman Bros. when it comes to Greece?
I believe it does.
Why else would the European Union have bent over backwards to "save" a member nation that: A) Accounts for 2.01% of the EU by trade volume; and B) Would essentially be like letting Montana go out of business - no offense to Montanans or Montana!
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Tuesday, July 12, 2011
Big Banks Waging Warfare Against the People of the World / Politics / Credit Crisis 2011
By: Washingtons_Blog
Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.
Saturday, July 09, 2011
Real Bills Doctrine, You Have Never Ever Seen An Elephant Fly / Interest-Rates / Credit Crisis 2011
By: Professor_Emeritus
In the 19th century a saying, long since forgotten, was current on Lombard Street: "There is nothing easier in the world than the banker's profession - provided that he can tell a real bill and a mortgage apart."
Friday, July 08, 2011
The Political Tide Against the Ratings Agencies / Politics / Credit Crisis 2011
By: Aftab_Singh
The bane of our pseudo-capitalistic system is the blatant double standard that is upheld with respect to prices. If the money prices of things go up, that’s ok, and the saint behind this wholesome circumstance is typically elevated to greatness. However, if the money prices of things go down, there’s got to be a bad guy somewhere — and boy does he get hanged, drawn and quartered in the town square.