By Simon Grey, on October 26th, 2011
The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.
The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.
A second downgrade — either from Moody’s or Fitch — would follow Standard & Poor’s downgrade in August on concerns about the government’s budget deficit and rising debt burden. A second loss of the country’s top credit rating would be an additional blow to the sluggish U.S. economy, Merrill said.
I wholly welcome this development for two reasons.
First, the downgrade might help politicians and voters wake up to the fundamental economic reality America faces. I don’t think the odds of this occurring in a timely manner are very good, but there having a ratings agency speak some semblance of the truth about the federal fiscal situation is certainly going to improve the odds.
Second, there is plenty of entertainment to be found in watching politicians and talking heads explain why a downgrade is just, well, wrong. The nihilist in me watches the world burn. The cynic in me enjoys watching the people who are burning explain how fire is a figment of our imagination. So, if nothing else, the inevitable downgrade at least promises to be entertaining. And, these days, you can’t ask for much more than that.
By Trace Mayer, on October 5th, 2010
I am grateful that a reader recently suggested to me the idea for this post about Anthony Weiner and I will carry over his sentiment. One thing I find particularly funny and stupid is when people with no marketable skills, ability to generate wealth, who lack prognostication skill and have a terrible record of managing their personal situation think they should babysit those with marketable skills, the ability to generate wealth, who are skilled prognosticators and have an excellent record of managing their personal situation.
All I can think is, seriously, you have rocks for brains making idiotic decisions resulting in stupid consequences and yet you want to tell me what to do? I suppose the only reasonable response is: Leave me alone and don’t touch my stuff, you idiot.
ANTHONY WEINER BEARISH ON GOLD
On 27 May 2010 I wrote about the Congressional Critter Anthony Weiner who decided to attack Glenn Beck and Goldline. While I did not defend Beck or Goldline’s assertions, I would use a different bullion dealer like Apmex with lower premiums, what I did defend was their ability to engage in consensual transactions with voluntary customers at mutually agreed upon terms unlike Mr. Weiner’s congressional salary which he extorts through violence from federal taxpayers.
On 18 May 2010 CBS News reported,
Weiner accused Beck and other conservative spokespeople (among them Mark Levin and Fred Thompson) of using “their shows to prey on the public’s fears of inflation and socialist takeovers while actively promoting the purchase of gold coins as insurance against this purported government overreach.”
WHAT ANTHONY WEINER BOUGHT INSTEAD OF GOLD
Assuming Anthony Weiner actually has excess capital, inquiring minds may want to know where he allocated it instead of gold. Thanks to Open Secrets we can easily access the Anthony Weiner 2009 financial disclosure form. Due to the form being out of date and containing generalized amounts we will have to estimate his actual financial position. It appears he had about $170,000 of net worth with about $12,500 of credit card debt. Mr. Weiner owned 3M (MMM), CR Bard (BCR), DOW Chemical Co. (DOW), McGraw Hill (MHP), Questar (STR), Rowan Companies (RDC), Sony (SNE), Teco Energy (TE), Zimmer Holdings (ZMH), Calpine Co. (CPN), Hewlett-Packard (HPQ), Micron Technology (MU), New York Times (NYT) and Wells Fargo (WF). I warned against buying McGraw Hill or the New York Times, Hewlett-Packard and Wells Fargo.
Although unlikely, we will assume on 31 December 2009 that his portfolio was worth $170,000, or about 154 ounces of gold, and equally allocated among the 14 companies listed on his disclosure form. From 31 December 2009 until 2 October 2010 this shows a decline in Mr. Weiner’s net worth of about $10,398 or 6.1%. But if we are consistent with RunToGold’s practice of using gold as the numeraire, then the loss is even more staggering going from 154 to 121 ounces of gold or about 21.2%.
So Mr. Weiner, how is not buying gold working out for you? Scoreboard. Look, losing over 20% of your net worth in a mere 10 months may be suitable for you but it is not suitable for me so leave me alone, don’t touch my stuff and stop trying to babysit me because obviously you are completely incompetent at even babysitting yourself.
FINANCIAL PROFESSIONALS
Of course, Mr. Weiner is not the only one. After seeing the record and the numbers I chuckle at some of the Establishment ‘financial professionals’. For example, in January 2009 on my article ‘How the Treasury Bubble Will Burst and Why‘ at Seeking Alpha I received a comment from Alan Brochstein, CFA of AB Analytical Services and fellow Gold Standard Contributor who provides analytical services for hire. He said, “Trace, sorry, but this makes absolutely no sense…” This is not surprising considering his 8 Dec 2008 article, when gold was about $772 per ounce, ‘Own Gold? Time to Fold‘ where he stated, “Gold remains a sucker’s bet…”
ANTHONY WEINER’S DAILY SHOW APPEARANCE
On John Stewart’s Daily Show Mr. Weiner makes an incredibly funny comment, “Yeah, but considering that I don’t have a lot of marketable skills I am like one of the jobs Obama created so I get to keep doing this. (1:41)” Well, I guess it would be funny but it isn’t. Fortunately, it appears Mr. Weiner is not intentionally exacerbating the greater depression but just doing it through sheer stupidity and lack of marketable skills, the inability to generate wealth and a really bad prognostication ability which has led to a massive decline in his net worth.
CONCLUSION
As the United States moves into election seasons keep in mind that almost all those on the ballot, in federal, state and local elections, are like Mr. Weiner. Not only are they unable to adequately manage their own financial and personal circumstances but in almost all cases they lack marketable skills and foresight. Like Mr. Weiner their portfolios when measured in gold have sustained heavy losses.
Unfortunately, misery loves company and they want to extend the pain to those with marketable skills, the ability to generate wealth and have properly prognosticated which has resulted in increased net worths. So protect yourself from these incompetent looters and moochers which is easier to do at the state and local level through state income tax optimization. By all means, please leave your opinion in the comments about these Congress critters and other looters and moochers!
By Mark Alvarez-Anderson, on September 17th, 2010
As I articulated in a previous commentary, if the Fed stays loose to prop up the bond market, this will only undermine the bond market. In real terms, the bond market tanks.
Now the Fed might be able to prop up the bond market in nominal terms, but what this will do is precipitate an exodus from all dollar-denominated securities (e.g. equities and bonds), compelling speculative activity in other asset classes in order to protect themselves against a depreciating currency.
As the Fed undermines Tituslandia’s bond market in the process of trying to prop up it up, yields remain artificially low. This compels lenders/investors to seek higher rates of return in other asset classes. I can only conclude, then, that Dina Titus supports wild speculators.
By Evelyn Black, on April 14th, 2009
With the recent turnaround in the stock market, happy days are here again, at least for a minute. And yet, if you are very, very still, you will a hear a faint rustling in the background, like something scary sneaking up on a rabbit.
That rustling you hear is everybody sneaking around looking for anybody to blame for our current economic distress. Soon we will witness a free-for-all blamefest.
Let me just get a jump on here that while no one is paying attention.
First of all, I don’t believe that we are witnessing the bursting of an ‘oil bubble.’ What we are seeing now is a combination of 1) an expected drop in prices due to a drop in demand and 2) a reaction to market turbulence that sent the dollar dropping rapidly against the euro. This happy time won’t last. It’s a blip on the screen; a shiny reflection on the water that survivors stranded on a deserted island briefly mistake for a rescue ship.
Calm down. It’s not a rescue ship. We really are doomed.
So let’s get back to naming names and assigning blame. Who caused this mess? Was it Alan Greenspan? Was it day traders and short sellers? Was it oil and commodities speculators? Whom should we string up for this? I think there is plenty of blame to go around, but it doesn’t seem to be settling in the right places. It may never settle there. That doesn’t mean I can’t assign it in my own special way, right here, right now:
Bad CEOs.
Why is it that if I go to the restroom too many times on my shift I get in trouble, but if our CEO loses us billions of dollars by making risky investment decisions that go bad, he gets to retire with a golden parachute of $132 million? Personally, I call that bad management. I mean, I could run our corporation into the ground faster and better and all I would require by way of a parachute is a single million dollars. That’s all I want, not a penny more. You see, right there I could have saved our stockholders $131 million but did anyone ask me? No. I’m not waiting by the phone either.
Dumb voters.
It really is the economy stupid. What did you think the spoiled son of a Texas oilman was going to do for you anyway? What ever made you think for one single second that he even cared? Molly Ivins sounded the alarm about Dubya over and over again, in book after book, and she kept on sounding it right up until her untimely death last year, but did anyone listen? They did not. You know those chickens that will be in every pot? First they have to come home to roost. That’s what’s happening right now. Try and catch one if you can. You’ll be needing the protein.
Consumerism.
Who ever heard of an economy that could sustain itself simply by buying tons of cheap crap from China? Which economic theory lays that possibility out in a way that makes even marginal sense? I used to like to troll the bargain end-caps at Target as much as the next woman, but no more. Even if it means the terrorists win, my pocketbook has forced me back to ‘use it up, wear it out, make it do’. I have been forced to ’stretch’ meat with noodles and mashed potatoes. Next I’ll be making Depression Cake. We should have known this all along, but, flush with cash, many Americans overspent while the housing boom was booming, and now that it’s bust, the party is over. Expect the next waive of credit defaults to be unsecured.
Congress.
Investment banks should not be allowed to chop up bad in debt and package it in ways that make it untraceable, then trade it in insane ways that bring down entire retail institutions. That is the sort of high risk gambit that regulation was invented to address, but no one in Congress got around to passing any regulation. Could it be because they themselves were making too much money while things were going well? No, that’s too cynical. Still, they have been less than effective. The current legislation meant to help out the five million homeowners expected to lose their homes this year to foreclosure, if passed, will help about 400,000 people, if the banks agree to work with them. It leaves the decision up to the banks. But it hasn’t been passed yet. There’s talk of a veto. God help us, because Congress won’t. You can count on that.
That’s my short list for today. I’d like to see a parade of CEOs held accountable for horrible decisions and unfathomable losses. I dream about that.
I may as well dream. You know what happens when we let dreams die.
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