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We Cut Your Food Stamps. We Put You Out Of Work, We're Crashing Your 401K's, Just So Boehner Treats Us To A Pizza Party, Which You Are Paying For, BTW... Ha, Ha, Ha

Pizza being taken to John Boehner’s office as the House speaker held talks with Republicans after the collapse of a deal to raise the government debt ceiling temporarily. Photograph: J Scott Applewhite/AP

Just heard that discussion was flying around Moody’s after the Fitch announcement today, over whether their rating should be in the “B” range or “C” range if the default occurs.

One train of thought was that with the alternative universe Republicans currently live in, where thinking that  we can weather the default of the debt ceiling as well as the government shutdown indefinitely or until at least Obama puts in his resignation papers,  dropping  the USA’s rating only a point or two, would not be an accurate portrayal of the risk.

These rating organizations have a reputation to keep.  Were they to make the bonds drop only from A+++ to an A++, or down to an A+, it would give credence to the viewpoints of the alternative universe’s thinking that “gee, that wasn’t so bad” and prolong the crises.

If the US Government can’t decide to open itself up, and can’t decide to pay the obligations to which it has already committed, then it is no better than Somalia, or Chad, or the Central African Republic They can’t open due to war and insurrection; we can’t open because of immature legislators.  The result is the same;  they aren’t governing, and that is a bad risk. Except we have a lot more money than Somalia, Chad, and the Central African Republic, which will depreciate faster than the Titanic hit bottom once it finally slipped under.

And that is the other side of the argument.  That considering the outcome of default, and effect of the lowering of the rating, that perhaps modifying the amount of the drop might be prudent.  Drop the bond ratings to the level of Portugal or Bulgaria, keep it in the “B” range, instead of the Somalian range where it belongs.

Then the other side counters back… But if we do that, the Tea Party will say, “see, they were lying, default is not as bad as they said…” 

Most likely they will err on the side of caution.  Drop it into the “B” range….  Save the “C” range for another day…. 

That at least, was the rumor told to me as being the current mood at Moody’s…  As everyone knows, the “official” word could be a whole different level entirely.

 

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Always knew they were on some serious drugs.

The last crises explained in hour by hour replay.

There is only one reason to remain in today’s stock market. That is if you “short” sold everything  to begin next week.  If you haven’t, it might be too late…  if I were the Chinese or other foreign investors, I’d bet short, and start pulling out right now. 

You know that is a safe bet.

I’m sorry I couldn’t react to this in a timely fashion. As it is, some time has gone by, but perhaps that is good. It allows minds to focus on it without getting twisted by emotions… As it is, I have tried to strip all partisanship out of the evaluation, and simply look at it as one would two neutral sports antagonists.

Here is the Boehner quote….

“What the president said today was if there’s unconditional surrender by Republicans, he’ll sit down. That’s not the way our government works.” –

That is just wrong. Opening the government back up is now… “unconditional surrender”? From an inpartial viewpoint Boehner just lost the battle of public opinion. For now, anyone out of work is so because in Boehner’s own words, it would amount to unconditional surrender for Republicans.

All the past pointing fingers at the president are in one sentence proven to have no bearing. For if it were the president’s fault that the shutdown were occurring, the “unconditional surrender” would have to be on his side.

But opening the government back up, only hurts the Republican position. It doesn’t weaken the Democrats position one iota. Therefore Boehner just admitted full blame himself for the entire shut-down. By saying it was “unconditional surrender”, Boehner despite all his previous jabs, now implicates only the Republicans. The shutdown is indeed now the Republicans fault and Boehner just proved it….

Why is opening the government an “unconditional surrender” for Republicans? Because they caused it. They benefit from it. And if it goes away, they lose….

This is why the dead can’t be buried and the living can’t earn incomes. This will be why the entire global economy will crash with a drop 50 times more powerful than the Lehmann collapse… This will be why the other nations, China, Russia, North Korea, and the Muslim nations, will take advantage of our incapacity and make changes to geography completely undreamed of by today’s current Republicans. Gee! What a great time to eradicate Israel. Wow! When the USA is too incapacitated to help them…

All because the Republicans might lose if we open up government… Boehner himself let it slip: to open government would be “unconditional surrender.”

Now usually when one surrenders unconditionally, it is because he is getting pounded and can’t take it anymore. Although they are taking a pounding in the polls (28%), they aren’t the ones suffering. Federal workers, those businesses dependent upon the government, and those requiring the government to be open and running, are the ones getting pounded…

So it is really as if we launched a first strike against the Soviets, and when they launched back we used telemetry to divert all their missiles to Brazil… “ha, ha” we laughed. “Let all those suckers suffer; we aren’t surrendering… you have to surrender first!”

In this regard, Republicans are no better than Al Qaeda when using Iraqi school children as human shields. To paraphrase a recent phrase from TV and to make fun of Boehner’s orange skin color all at the same time, one could say… “Orange is the New Al Qaeda….”

To save face and stop this, all Boehner has to do, is say. “Every Republican is cut loose; vote your conscious or as your constituents back home would wish”… and put the clean bill on the floor.

There is a reason we don’t negotiate with terrorists. For if you let them go, they will do it all over again…. and keep on doing it, as many times as possible until you stop them.

I sometimes forget that people really don’t understand the financial markets as well as they should.  That’s very understandable.  I don’t understand everything it takes to build a road, as much as I should. 

There are so many things to know; we can’t know everything.  When I posted a message about getting out of the markets, I received a comment that reminded me that not everyone was up to par on what is about to happen and how that will affect them.  

Here is why getting out now is a good thing, and why staying in “for the long haul” is a bad thing.

Assume you have $10,000 in stocks.   If the stock market drops 40% as it is prone to do, it will be years before it gets back up to its level.  On the Dow Jones a 40% drop would be like going down to 9000 to give you an idea.  That can happen in a day, and with most IRA’s, you have to put your bid in one day and it comes out the next.  You could do it now, and if it crashes tomorrow still lose it all.

Which is why you should act today, Friday, and take a chance on Monday.

If you don’t.  here is what will happen.   That $10,000 could become $6,000 by next Monday afternoon.  But you are in it for the long haul, right?.  Again after 2 years of  awesome 30% growth,, that money-total of yours has again climbed up to $10,000.  No big deal you shrug. You were in it for the long haul. You lost nothing.

Now, the other side of the story.

You switch the $10,000 right now over to a Treasury bond fund.  There is not much growth, so it stays at $10000 for a while.  Of course, everyone else has lost 40% but you are steady.  

So when the market stops losing and starts bouncing back, you go in at the bottom. with your full $10,000.   After 2 years of 30% growth, you have $16,000.  Had you stayed, you only had $10,000.

That is why, both those who are smart and unsmart should get out of  the stock market now.

In layman’s terms its the equivalent of protecting your property upon notice that Superstorm Sandy is headed for Delaware’s shores.  You can take your chances that it will blow over and do nothing….. you could be right if you are very lucky.  or you could hedge your bets and with little or no expense, and just a tiny bit if effort, protect your assets from any damage that could occur…. 

Just saying that an economic superstorm of gigantic proportions is headed your way.

 

 

Here is what happened the last debt crises… published from the Treasury’s blog

“The financial market stress that developed in
August of 2011 persisted into 2012 even
though Congress raised the debt ceiling prior
to the exhaustion of extraordinary measures.”

“From June to August 2011, consumer
confidence fell 22 percent and business
confidence fell 3 percent.”

“Financial market conditions have a direct
effect on economic activity. A good deal of
household wealth is held in financial assets,
and much of household and business
spending is funded by borrowing. Thus,
lower asset prices and higher borrowing costs
tend to weigh on private spending ”

Now the clicker….

“So far this year, Treasury yields have
been rising on balance, which means that any
adverse effects from financial market
disruptions caused by a debt ceiling debate
may not be offset as it was in 2011.

That is why it is unlikely that Boehner will send us over the edge. In fact, the sooner he sells out the Tea Party, the better…

The last 5 days of stocks…
-70 -128 +68 -58 -120

Do you feel poorer already? Better cut back on that spending…..

Hold on tight, ladies and gentlemen. You’re going to see money running away like “its a giant kegger where the last one left gets stuck with the bill…… “

If one is driving southbound down the Pacific Coast Highway and comes to the cliff where Jimmy Dean’s character went over, and your passenger grabs the wheel, turns hard to the right, stomps on the gas….. whose fault will it be if the car goes over the proverbial financial cliff?

Exactly, all you Republicans out there.  Exactly.

If the US economy tanks because our ratings get lowered one more time… It won’t be the fault of ANY democrat.