Scumbag rating agencies should have downgraded us back before 2007. Finally getting around to it and even now, it's hardly enough. We've got worse finances than most 3rd world countries and banana republics and it's about time everyone acknowledged it.
Look out below on Monday. Far value for the DOW is probably around 7500. Until then, anyone in equities is not only foolishly brave but hopefully only wagering 'mad money'.
Let's face it folks, our country is taps because our elected officials are all worthless whores and Wall Street is their pimp.
If corporations want to have the status of Individuals, then they've got to pay taxes like individuals - without deductions. Who benefits from our insane national defense budget? The multinats. And they should pay it all.
I seriously pity anyone that's long but damnit, we've been warning you for years now that this is a rigged game and you play at your own risk. It's like the casino that always has the edge. Over time you will lose but it can be fun and entertaining to play. So, if you occasionally do win, try to keep some of it.
peace,
rono
Comments
Never imagined I'd live to see a mess like this.
Still don't understand all the origins, much less the consequences. But I very much have the sense that we're watching the sun set.
We are adrift.
very interesting commentary
Personally I think with all the corruptions in s&p as well as Govt [don't bite the hand that feed you in a sense], S&P have their hands full and they cannot do anything else beside downgrading it a little.
What do you think are the best ideas for investing [what vehicle is YOUR FAVORITE NOW] if you still have a long horizon. Do you think due to low P/E stocks are good to hold long term still.
I am nervous, looks like/sounds like it may go down to 7000 or 8000 the next few months... but again, the stock market is very unforgiven and they don't remember too well, just over reacting. They may go up slowly again due to corp earnings, you never know... but I feel that we maybe sideway for quite a while or may go down from here, best we may be up in the low 10s% at the end of the year if we are lucky
None of its pleasant. The question might be "what will it take to address the Dueling Dual Delusions: (1) we don't need additional revenue and (2) we won't touch entitlements."
In 2007, the debt burden was much more manageable and the political system much less dysfunctional -- give or take that year's DDD: (1) America's financial system necessarily works in America's best interest and (2) it'll all be better once George is gone." I'm not sure I'd condemn S&P for not acting then. I might, but I'd need to go look at the record more closely than I have.
Shall I add the book The Irony of Democracy to the Amazon store? Thomas Dye and L. Harmon Ziegler. I read it as an undergrad (hmmm... Jerry Ford was running things at the time) and am still struck by its horribly-sad conclusion: democracy only works in the absence of democratic participation. There's really good evidence that if you get "the people" riled up and involved in governance, Bad Things routinely happen. Seems true whether you're an Egyptian liberal now getting clubbed by the folks whose freedom you championed or a moderate Republican trying to find a way of actually reduce debt or a conservative Democrat figuring out how to balance the long-term books without being taken down by the AARP and your own best friends.
I think I'll go curl with a Jeremy Grantham's latest quarterly letter.
David
Bad news for the economy generally means tough times for stocks. But history shows that when a country loses its AAA credit rating, it's not necessarily terrible news for that nation's stock market.
The rating agencies could rate us AAA but we would have far more failed companies, far more unemployed. Government would have no obligation to these people and could continue to reduce payments as revenue goes down. You could keep AAA but endure such public misery. Which one would you prefer?
Oh, China making noises about US downgrade. Will they stop buying US debt? I doubt it. I wish they did. But if they want us to buy their crap, they will continue to buy US debt. It is all meaningless acts.
August 5, 2011 10:20 AM
SAINT LOUIS - Here’s an interesting way an unnamed blogger has tried to explain Wall Street’s meltdown in spite of the deal struck in Washington this week. He warns to “Keep in mind that none of the figures below even COUNT the additional HUGE unfunded future liabilities associated with Social Security and Medicare, estimated at an additional $30 trillion or so. And he notes that these figures are constantly rising based on data found at www.usdebtclock.org and added the point that the National debt, unlike personal debt, never just “goes away” via bankruptcy by those who incurred it. It just gets passed on to future generations.
Understanding the Federal Budget & National Debt
The U.S. Congress sets a federal budget every year (or should) in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:
•U.S. income: $2,201,000,000,000
•Federal budget: $3,820,000,000,000
•New debt: $1,619,000,000,000
•National debt: $14,572,000,000,000
•Recent budget cut: $38,500,000,000
It helps to think about these numbers in terms that we can relate to. Let's simply remove eight zeros from these numbers and pretend this is the household budget for the fictitious “Jones family”:
•Total annual income for the Jones family: $22,010
•Amount of money the Jones family spends: $38,200
•Amount of new debt to add to the credit card: $16,190
•Current balance on the credit card: $145,720
•Amount cut from the budget: $385
So in effect, last month Congress (or in this example the “Jones family”), sat down at the kitchen table and agreed to cut $385 from this year’s budget. What sane family would cut just $385 from the family budget and think that’s enough progress toward $16,190 in deficit spending? Only in Washington!
SOURCE: Doane Advisory Services
In response and directed to the board in general...
This country is sliding down a rat hole.
Not to pick on MJG, who on May 31 forecast that the S&P 500 Index
would close the year about 173 points above Friday’s close,
but I think that the market will go lower, and your real returns will not come close
to matching your expectations, regardless of all of the
cleaver diversification and fancy math you can apply to projecting future returns.
If you’re playing it casual with your investments and expecting
a decent return over the next several years, you’re going to be disappointed,
much like you probably feel about the last 10 + years.
If you’re going to need the money, I suggest that you get off your butt and
make it while you can because this rat hole is going to require a wrenching
economic fix, that at best, is a long way off.
Flack
Thanks for calming me down although I'm still fundamentally pissed at our politicians.
As for this downgrade, feh, Captain Price will deal with it in his own way although in this case, the collateral damage will happen to real people whom are basically innocent.
What we're seeing is the result of the western gov't bailing out their bankers when their bankers made bad decisions. Instead of allowing the Good Captain to work his magic, and let those dumb SOBs absorb their losses, all those good campaign contributors 'persuaded' our gov'ts to step in and assume trillions of dollars of losses placing them thereby on the backs of their populations. The folks in Greece apparently don't like it and at 'good gd last' the rating agency(ies) are now saying, 'er, this is all a very toxic cup of tea and we don't think it will go down well with Joe and Jane 6-Pack'.
duh. ya think?
Investments? I haven't really changed my thinking for more than a few years now. I believe I was touting gold and particularly silver back in 2002 to more than a few of you but enough gloating.
Going forward and forever, you simply must divesify not only your 401K, or your portfolio, but your wealth . . . and your life. Diversification is the key, boys and girls.
We know about diversifying a portfolio - stocks, bonds, cash. Then internation and emerging mkts. Then sector plays and size plays. Then commodities and alt investments[.misc or .alt?!?].
How about your wealth? Ah, there's the rub. It's been 4-5 years now since I first read the quote by the good Baron Rothschild about how one should have 1/3 of his wealth in securities, 1/3 in real estate and 1/3 in rare art. Since reading this and having my 'moment of clarity', I've been heading in this direction. I realize I'll probably never be able to get to 33/33/33, but that doesn't matter. It's the approach and direction and reasoning behind it that matters.
Rare art? feh, define it as you wish - guitars, watches, beanie babies, gold and silver crowns of the world, rolex watches . . . or rare art.
The point is that you sit your ass down and run the numbers on YOUR wealth and see what fits into which category. When I first ran mine, it was 90/8/2. I was so ill, I blew chunks. See what yours is and decide how you might rebalance. Rebalancing your wealth is no different from rebalancing your portfolio. Hell, I cashed out both my traditional IRA and 401K [my 457 was much larger than both and it remains] and converted the proceeds into cats 2 & 3.
Diversify your life. Basic stuff that I'm sure your aware. First of all, always continue to upgrade your skills. By this I mean that you have to plan on learning until you die. Just do it. You have to continue to expand your network. Volunteer in the community. Travel - even if nearby - and see something new.
Diversify. The best fruit salad contains the greatest variety of fruits and nuts.
peace,
rono
Hope you and yours are doing well. Hey, you've got to CYA. Not sure that means going survivalist, but there are many, many preparations that once taken will never hurt you.
Risk management is a very interesting concept. What are the possible outcomes, what would be the respective consequences (losses or gains) and what are the odds.
Buying a lotto ticket for $1 has a small cost, great potential gain and hideous odds.
Having the extra drink in the bar has perhaps some gain, but horrific costs if you should have an accident or get pulled over driving home.
Now if we look at our economic and political futures, we could see financial meltdown, peaches and cream recovery or some sort of multiyear malaise of not even stagflation [ex-editor coined a term but I can't remember and it was from the other board, I'm thinking it was despair or something equally nasty].
Now, what are the odds of each? I'll give them 25/10/65 just for arguement sake. Pick your own poison.
Sokay. Now what are the consequences to you and yours should any of them occur? Second is great, third is unpleasant but the first - financial meltdown - has some very serious consquences that I prefer not to envision, por tengo que.
Now, what do I need to do to prepare for each of the above scenarios? What will be the cost of the preparations? Now, take it a step further and determine the expected outcome from each vs. cost. If you want to do this scientifically, you can run the numbers. I posit that most of the preparations one can do to protect against a worst case scearion are inexpensive on the margin and generally prudent actions that could be classified as insurance.
The nut is that while I see a financial meltdown as being an unlikely outcome, the possible consequences are so dire, I simply have to take some precautionary measures. Not doing so is unthinkable.
peace,
rono
http://www.gurufocus.com/news_print.php?id=139929
This is a scheme to get US drop its obligations to the poor and retired to bail out the rich again.
Thanks for the Romick article... enjoyed it.
And what's with the blue box around my previous post?
The blue box indicates that the post is from you; and you will see this when signed in to MFO. The rest of us do not see the color/highlight. Tis helpful to better indentify your/one's own postings in a thread.
Regards,
Catch
I very much agree with your cautionary comments.
BTW, I did sell some silver coins a couple of months ago at around $36 because
I thought it was near a top. Anyway, it was a nice profit.
But I'm till holding gold - since around $1,100.
Anyway, what I meant about "get off your butt and make it while you can",
was along the lines of using the market instead of the market using you.
In other words, being more proactive. For example, I sold my LT long positions
and (I know that you don't like going short) I bought SDS on 7/29 and 8/1.
This to me, this is a proactive "risk management" move.
I know that most people here are actually afraid to assume a short position.
I do so, not because I want the market to drop, but because it IS dropping.
So, somewhat like you, I'm just a follower of the market.
Thank you for your comments, your earlier suggestions about PMs,
and my best to you.
Flack
Sold about 1/2 of SDS position at the close.
A 29%+ profit.
I'm not promoting quick trading and don't recommend it.
I only tell you this because I mentioned that I bot SDS and so I'll follow through and
post when I sell it.
Again, I think that in these times, investors should be more proactive and
prepared to take market opportunities... even if that just means hedging your bets
with logical diversification as you have often mentioned.
Flack
SDS fell to my stop @56.50. I'm out if the last half of the trade with 24% gain.
Will wait to see where we are at near the close... I think that today is just a
reactionary bounce (bottom fishing) and the market will soon head back down.
If that is a serious question, then the answer is -
if you don’t know, then you shouldn’t be doing anything.
We’re in a trader’s market – computer vs. computer and
there is some big money being made and lost quickly… so, the question might be –
Do I want to step in front of this bus?
A better/safer time to buy is when you can get on the bus.
If that is a serious question, then the answer is - . . (snip) . . A better/safer time to buy is when you can get on the bus.<
Yeah, I guess.
(I was just wondering about getting back into Ford and/or GM)