<div class="gmail_quote">On Mon, Aug 8, 2011 at 10:28 PM, Paul Rumelhart <span dir="ltr"><<a href="mailto:godshatter@yahoo.com">godshatter@yahoo.com</a>></span> wrote:</div>
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<div class="gmail_quote">I'm not an economist, and I wouldn't put it past the people in charge<br>not to do something really stupid in order to "fix" this. I just feel<br>that this is a manufactured tragedy and it will go away as soon as there<br>
is something else interesting and shiny in the news to focus on.<br></div>
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<div class="gmail_quote">Manufactured tragedy?</div>
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<div class="gmail_quote">Assuming the following analysis has any merit, which I heard on CNBC today, the economic problems of the US government are all too real, though I think the Tea Party, if I may call it that, response of spending cuts while refusing revenue increases (just closing corporate tax loopholes could generate revenue with no increases in income tax) is no more economically wise than the allegedly tax and spend excesses of so called liberals.</div>
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<h1 class="test1">US Closer to 'Junk Bond' Status Than Triple-A: Bove</h1></div>
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<div class="mod provider-attribution"><span class="datetime"><a href="http://finance.yahoo.com/news/US-Closer-to-Junk-Bond-Status-cnbc-1137105289.html?x=0&sec=topStories&pos=8&asset=&ccode">http://finance.yahoo.com/news/US-Closer-to-Junk-Bond-Status-cnbc-1137105289.html?x=0&sec=topStories&pos=8&asset=&ccode</a>=</span></div>
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<div class="mod provider-attribution"><span class="datetime">On Tuesday August 9, 2011, 11:58 am EDT</span> </div>
<p>The US credit rating would be even worse than its recent downgrade from Standard & Poor's if the nation was judged as a private company, banking analyst Dick Bove told CNBC Tuesday.</p>
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<p></p>
<p>Speaking amid the hotly contested debate over <a href="http://us.lrd.yahoo.com/_ylt=ArDRpM7QuKRIROD1XheSHjLkba9_;_ylu=X3oDMTE2N3Q3YmI1BHBvcwMxBHNlYwNuZXdzYXJ0Ym9keQRzbGsDd2hldGhlcnRoZXVz/SIG=11jibeec9/EXP=1314138708/**http%3A//www.cnbc.com/id/44065072"><font color="#1a5488">whether the US should have lost its coveted triple-A rating</font></a> in favor of the new Double-A plus, Bove said the US balance sheet and the burdensome national debt tell a clear story.</p>
<p>"You've got a company which is losing about $1.4 trillion this year, probably will lose somewhere around a trillion dollars over the next couple of years. It owes $14.4 trillion (and) over the next five years that will get up to $20 trillion," the Rochdale Securities analyst said. </p>
<p>"So there's no likelihood whatsoever that this particular company is able to pay down from its own resources the amount of debt that it has, nor is there any likelihood that it's going to get rid of its deficit," he added. "If that was a real company, of course, that would be a junk bond."</p>
<p>The S&P downgrade late Friday roiled financial markets, causing wild swings in trading Friday as rumors of the move spread and then in part triggering a more than 600-point selloff Monday in the Dow industrials.</p>
<p>While <a href="http://us.lrd.yahoo.com/_ylt=AmZiYEzTYcMhV4y2ImwXQaDkba9_;_ylu=X3oDMTE2ZWNoZ2ltBHBvcwMyBHNlYwNuZXdzYXJ0Ym9keQRzbGsDdGhlbWFya2V0cmVi/SIG=11ju93nml/EXP=1314138708/**http%3A//www.cnbc.com/id/44073098"><font color="#1a5488">the market rebounded in early trading Tuesday</font></a>, Bove said he would not be buying stocks that likely have more downward pressure ahead.</p>
<p>"I still would expect to see a thousand-point down day at some point in this market as people come to realize there has been a complete change in the financial structure of the world," he said.</p>
<p>While he believes bank stocks are cheap he would not be buying amid what he expects to be significant turmoil.</p>
<p>"We're building a reserve currency around a country which is bankrupt and can't pay its debt. How can you in essence be aggressive and say, 'I know where the bottom is, or I know how this is going to adjust'?" he said.</p>
<p>"We have people buying Treasury securities because they're worried about the Treasury," he added. "We've got people selling banks stocks, taking the cash and putting into the banks for safety. It doesn't make sense. What you're seeing is this adjustment is occurring and people are not sure how to react to this adjustment."</p>
<p>If Bove did decide to buy bank stocks, he said one of his targets would be Bank of America (NYSE:<a href="http://finance.yahoo.com/q;_ylt=Aga859uI62VU3Ijj3nGUTUnkba9_;_ylu=X3oDMTB0dHYzcTU1BHBvcwMzBHNlYwNuZXdzYXJ0Ym9keQRzbGsDYmFj?s=bac"><font color="#1a5488">BAC</font></a> - <a href="http://finance.yahoo.com/q/h;_ylt=AvdsUZyS_4y1BzKSCXFesrzkba9_;_ylu=X3oDMTB1N2FvM2w0BHBvcwM0BHNlYwNuZXdzYXJ0Ym9keQRzbGsDbmV3cw--?s=bac"><font color="#1a5488">News</font></a>). He called the sharp selloff in BofA stock on Monday "a little bit obscene." The drop followed rumors that BofA might declare bankruptcy and preceded a sharp rally in the stock Tuesday.</p>
<p>"This company is so far away from being in trouble or needing additional capital that it's ridiculous," he said. "I think the market's going lower so I'm not buying anything. The fact is, if I were to buy something I would be buying Bank of America aggressively."</p>
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<p><strong>Vision2020 Post: Ted Moffett</strong></p></p></div>
<blockquote style="BORDER-LEFT: #ccc 1px solid; MARGIN: 0px 0px 0px 0.8ex; PADDING-LEFT: 1ex" class="gmail_quote">Because it's never been so much ado about nothing before?<br><br>The S&P credit downgrade is silly. If you hold T-bills, you have<br>
absolutely nothing to worry about. The U.S. has never failed to make<br>it's interest payments, and it really can't default since it can just<br>print the money it needs to pay you off since it's all denominated in<br>
U.S. dollars.<br><br>The debt ceiling thing had nothing really to do with the trillions we<br>have in debt. It was about meeting our pre-budgeted allocations. It's<br>like a husband and wife agreeing on what to buy for the year but then<br>
remembering later that they had made a New Years pledge to not spend<br>more than $X. Normally, they would just decide to ignore that number,<br>since they had already committed to their purchases together and had<br>already put the purchases on their card, but, alas, they've been<br>
fighting lately so they made a big stink about it.<br><br> From what I've seen, this is different than the real financial troubles<br>we had back in 2008, which we are still reeling from. And since S&P<br>didn't see that one coming (or pointedly looked the other way), I don't<br>
know why we even care what they rate our bonds as.<br><br>I'm not an economist, and I wouldn't put it past the people in charge<br>not to do something really stupid in order to "fix" this. I just feel<br>
that this is a manufactured tragedy and it will go away as soon as there<br>is something else interesting and shiny in the news to focus on.<br><br>Time will tell, I guess.<br><font color="#888888"><br>Paul<br></font>
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<div class="h5"><br>On 08/08/2011 08:04 PM, <a href="mailto:mushroom@moscow.com">mushroom@moscow.com</a> wrote:<br>>> Paul Wrote: On the other hand, if I had the money I'd buy<br>>> lots of good, sound stocks that have fallen in value that someone<br>
>> else has sold out of some hazy "fear of the financial situation" and<br>>> ride them back up to where they were in a few weeks time when this<br>>> whole stock market hysteria blows over.<br>
> That's good news -- the "few weeks time" part. How come nobody else seems<br>> to know this? How come recovery has never been that fast before?<br>><br>> Don Coombs<br>><br>><br>></div>
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