… AS USUAL, YOU ARE 3 STANDARD DEVIATIONS OF TIME LATE
Readers of Notes From Underground are aware of my total disdain for the three major rating agencies as they have sold their souls to the Wall Street money machine years ago. In an effort to regain some lost innocence, they are attempting to downgrade the nation-states of the world prior to economic calamity. The people at S&P were determined to downgrade the U.S. even when the U.S. Treasury pointed out that their math was flawed and the deficit going forward was off by a mere $2 trillion. Why should I put any value in a rating group that cannot even do the maths correctly and admit they were off by $2 trillion. Do we rally need the whores at S&P to tell us that the U.S. is a problem? Hey, GOLD is trading $1665. Don’t you think the market has already done its ratings?
If you are an ANALYST WHO DEPENDS ON THE WORK OF THE RATING AGENCIES YOU NEED TO BE IN ANOTHER BUSINESS. RATINGS ARE FOR THE PENSION FUND TRUSTEES WHO NEED SOME WEATHERMAN TO TELL THEM WHICH WAY THE WIND HAS BLOWN WHILE THEY SIT IN SOME INVESTMENT BANK’S SKY BOX AT YANKEE STADIUM. Oh, GREEK DEBT GETS DOWNGRADED WELL AFTER 2-YEAR GREEK NOTES CLIMB MORE THAN 10% AND 20%. AGAIN, THE MARKETS HAVE DONE THE RATING ALREADY. IT SEEMS THAT S&P IS GETTING ITS DATA FROM CARRIER PIGEONS WHILE THE INVESTORS OF THE WORLD ARE USING THE INTERNET.
The only question is why S&P decided at this time to downgrade the U.S. debt with so much other turmoil in the world. Would waiting until some stability returns to global markets have been a more prudent thing to do, especially knowing that the math you were utilizing was suspect and prone to error? It begs the question: Being that you are a private, profit-making group and people pay for your services ,to whom did you provide an early release of this “important” decision and how much money was earned? This will become the real issue as even the SEC should be able to examine the market data and secure some certainty about who was able to profit from S&P’s diligence.
Again, the GOLD MARKET HAS DOWNGRADED THE U.S. and Europe long ago. To S&P it is important to ask: WHAT TOOK YOU SO LONG? The only non-conflicted agency, Egan-Jones, downgraded the U.S. awhile ago so it is really no surprise.
The bigger issue for the markets tonight and Monday is whether or not the G-20 or G-7 has crafted a major bailout package for the European sovereign debt market. Rumors were/are running rampant about global phone conferences all through the weekend as WORLD LEADERS and FINANCE MINISTERS attempt to head off a major collapse of markets when Asia begins trading. Bigger than the U.S. downgrade, though, was a story in DER SPIEGEL over the weekend stating that the Germans believed that tripling the EFSF would still not make it big enough to save Italy.
If this story gains traction, it can be the main vulnerability to a very fragile global financial system. The DER SPIEGEL piece is very interesting because the ITALIAN 10-YEAR staged a massive rally on Friday as the BUNDS were sold very aggressively. Again, I urge you to be attentive to the Bund and Italian bond futures markets when they reopen on EUREX Monday morning in Europe. The stage is being set for a major announcement from the G-7 about a massive coordinated support package.
Also, remember that the keys to the IMF treasury are in the hands of France’s previous finance minister, Christine Lagarde, so be alert for the IMF to be throwing its financial weight into the mix. If the markets unravel you can be sure that all assets will be targeted and the havens will attain an even higher status. As my friend Dennis Gartman is fond of saying, WHEN THE WHORE HOUSE GETS RAIDED EVEN THE PIANO PLAYER GETS ARRESTED.
There is no question that the global financial system is on TENTERHOOKS for on Sunday the ISRAELI stock market closed down 7%. Will that be a precursor or a wakeup call for world leaders? Arise, arise, shake off the sand and get the needed support to the areas most in stress. Anybody AWAKE?