one of those

[solarbird]

This is one of the less worrysome rumours, that now has a good source:

S&P's Chambers: Pressure building on AAA rating
Wed Sep 17, 2008 12:19pm EDT
Reuters
By Walden Siew

NEW YORK (Reuters) - Pressure is building on the pristine "AAA" rating of the United States after a federal bailout of American International Group Inc, Standard & Poor's sovereign ratings committee chairman said on Wednesday.

The $85 billion bailout of AIG on Tuesday by the U.S. Federal Reserve "has weakened the fiscal profile of the United States," S&P's John Chambers told Reuters in an interview.

"Lack of a pro-active stance could have resulted in further financial stress and put pressure on the U.S. triple-A rating," Chambers said. "There's no God-given gift of a AAA rating, and the U.S. has to earn it like everyone else."

If treasuries lose AAA, the entire game is over. Meanwhile, here's more on how the Fed is running out of money, and raising more through emergency auctions. The last few months, those have mostly - overwhelmingly - been sales to sovereign wealth funds and similar foreign-governmental interests. Is this a good idea, and is it a stable situation?

also: TED to 304. Not tasty.

Comments

[mhaolain.livejournal.com]

Hey solarbird, thanks for keeping up on all this. I'd love to comment more, but so much is happening, so fast - it's all I can do to snap my head back and forth as the bodies fly by. It's unbelievable what's going on, the total chaos and so much money at stake. Crumbs!

[solarbird]

Well, right now, the equities markets are staging a bit of a rebound, the Dow up 150 from lows (tho' still down 200 for the day). Nasdaq and S&P 500 rallying too. We'll see where that lands, I suppose.

FTSE

[nojay.livejournal.com]

The British FTSE took a 5.61% bath today, on the back of the bad news coming from the US. No late rebound. I can't recall off-hand what the trigger is to suspend trading on a given day, but I think it's an 8% fall.

Re: FTSE

[solarbird]

Russia has stopped trading two days straight. Given falls of 17% and 10% in that order, I can't say I blame them.

Hrfm, US dollar is dropping quite a bit now, and the closing numbers were not good. And nine minutes after the close, they're still settling trades. Brutal. DJIA down just over 4%, S&P 500 down 4.7%, NASDAQ down... barely shy of 5%. Not a good day.

Re: FTSE

[mhaolain.livejournal.com]

That link you provided at the bottom of this post is pretty scary stuff. But it really comes down to - where will the wave crest? How far inland does the tidal wave go and what does that mean? Somebody's got to pay in real physical terms. I mean, what happens when the US loses it's AAA rating?

With all the buying of bad debts the Fed has been doing, it may already be too late for the treasuries. Aren't they going to stop buying up institutions "too big to fall" in the hope of having something for when the financial secret bombs go off?

Selling more treasuries, creating a "there but not there" fund to sweep it under the rug. Begging overseas for takeovers? What's the sign of the four horsemen? Right now, anything looks like it could happen.

[elfs.livejournal.com]

Wow. Wow. If I understand this right and the Treasury's own rating drops below AAA, international incentives to borrow money against the Treasury's anticipated worth will drop like a rock, right? The US will have to start servicing its debt with internally generated revenues-- taxes-- or default. Have I got that right?

Holy goddamn resurrected Horus on a popsicle stick.

[solarbird]

It'll get a lot more expensive to do that financing, whoever ends up lending the money. A few points, at least. Now check the percentage of the US budget which is debt finance.

[silussa.livejournal.com]

Okay, the really basic summaries:

o There aren't going to be any more bailouts because, as you already said, if Treasuries lose their AAA status, it's game over.
o There's not going to be any major tax money giveaways, by EITHER candidate, for the same reason
o To shore up support for that rating, the Government is going to have to raise taxes going into a recession. Something last done in significant scale in 1930 or so, the effects of which have already been noted in the history books.

In short, oh *****.

[silussa.livejournal.com]

Money Market Fund Breaks a Buck (http://www.usatoday.com/money/perfi/basics/2008-09-16-damage_N.htm)

If this keeps up, we're going to need to invent a few new words of profanity.

[silussa.livejournal.com]

APR's Marketplace is reporting that some bidders on 35 day Treasuries today actually bid ZERO percent, just to be reassured they would get their money back.

Last time I recall those sort of bids was the Great Depression. Or, running a google, Japan in 2002?

[silussa.livejournal.com]

13 week Treasuries are down 94% in yield. (http://finance.yahoo.com/indices?e=treasury)

People are in a flight to quality, it seems, and they're not being fussy about the quality at the moment.

[oh6.livejournal.com]

I seem to recall that the province of Ontario's credit rating dropped to AA some time, maybe in the '90s, since that's when the national debt-to-GDP ratio was highest. It was a non-event, but then, the US is about 60 times bigger.

[solarbird]

Sure. And states have had similar things happen. But the US dollar is the global "reserve currency," and, more importantly, the US is as massive debtor relying entirely at this point on foreign governments to float its increasing debt.