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"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."
Lord Acton
It appears that my suspicions about a hidden agenda and undercurrent in today's trade were correct. There were prints of something significant but undisclosed all over the tape, yesterday and today.
The official line will try to downplay this next week, and they may attempt to tinker with the market to support that story line. They have positioned Treasuries and the metals to help them do this. They did not quite succeed with gold.
It appears that this information known earlier on by at least some market participants, as the "government prepared for the downgrade" as reported to ABC news. S&P delayed the release this afternoon as the Treasury found 'a 2 trillion mathematical error' in S&P's figures.
Are you kidding me?
The US rating remains unchanged at Fitch and Moody's. This may ameliorate the effects of the downgrade.
There are no coincidences in politics, and international financial ratings. Watch and see how they never 'waste a crisis.'
The Governance of Money - MacroBusiness
There are some ways in which this crisis could be seen not so much as a financial crisis, but as a prelude a much deeper conflict of governance. This time it is not North versus South, but along the borders of wealth and power. Still, the lines of conflict are drawn along ideology once again, and what it means to be a human being with equal rights and obligations.
The currency and class wars will intensify.
United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative
· We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.
· We have also removed both the short- and long-term ratings from CreditWatch negative.
· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.
· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon.
· The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
Read the full report here.
After the bell, a Reuters story quotes an ABC News report that the US is preparing for a downgrade of its sovereign debt, according to an unnamed government source.
(Reuters) - The U.S. government expects its debt to be downgraded by credit ratings agency Standard & Poor's from its current triple-A rating and is preparing for the event, ABC News said on Friday.
ABC cited an unnamed government official as its source and said it was uncertain whether the rating would drop from triple-A to AA+ or to AA.
The report said the main reasons likely to be cited for a U.S. downgrade by S&P included political confusion surrounding the process of hiking the debt limit and doubt that agreement would be reached on more deficit reductions..."
It should be noted that there is not a consensus on this. Forbes says that S&P will not downgrade the debt.
This contributed to the remarkable volatility in US markets today, despite a better than expected Non-Farm Payrolls number.
The initial response was what one might have expected, but it was quickly met with selling that provoked more volatility and selling that reached a crescendo around mid-day at some key technical support areas in stocks.
This market is good for Wall Street and traders, and very bad for the real economy. It adds to the sense of uncertainty and riskiness in business and investment planning. It is a gambler's market, and not even a particularly honest gambling environment, with a noxious mix of asymmetrical information flows, front running, deception, ponzi schemes, and con men.
I am now even more suspicious that there is a strong artificial element to thhe trading in these markets, and a 'setup' for either the re-introduction of Quantitative Easing, and softer bailouts and subsidies for the corporate sector in the name of recovery and 'jobs,' or a credit downgrade event in which the economic hitmen make the US an offer which they think that they cannot refuse.
I also wonder if the threats from S&P were a pre-emptive warning on QE3. Make no mistake, there is a currency and class war underway, and things are not as they may seem to be on the surface.
The debt issues in Europe and the FOMC meeting on Tuesday will likely contribute to the market swings based on trading algorithms and the 'technicals.'
Gold showed remarkable resilience, and a safe haven aspect even with the obvious bear raids that hit the metals, especially silver.
Here is an interesting 2009 Bloomberg Radio interview with Jim Sinclair. It is well worth listening to with the benefit of hindsight.
This is the same SP whose ratings were for sale to the banks throughout the build up to the financial crisis, and which has largely escaped investigation and indictment. So, even though their opinion here may be valid, how are we to know that it has not been bought again, with regard to timing and impact?
And of course the word of the downgrade was held completely confidential, even from insiders, right?
As I had cautioned last week, something wicked this way comes. Its tracks were on the tape, most likely in word leaking out to insiders who succeed as they usually do, not in any personal merit, but by breaking the rules for their benefit.
That is the problem in dealing with an unreformed, unindicted, and corrupt financial sector. Who do you trust? And this has a decided drag on economic recovery.
The failure to reform when he held the mandate was Obama's greatest mistake. But others made the same mistake, from the Congress to the Fed. Their motivation for this policy error will be the subject of much future speculation.
This negative outlook is not a surprise. It is consistent with a growing crisis in the US.
Notice that gold and the Swiss franc, and to a lesser extent silver, were safe havens choice of the people. The bonds were hit especially on the long end, with a flight to the short end. Stocks were hammered in the flight from risk down to support in a fairly cynical manner it seemed to me.
Of course in the secondary action the wiseguys took the opportunity to stage a calculated bear raid on the metals. Kind of like machine gunning the refugees and burning the life boats. Their criminality knows no bounds, has little self restraint, and is lawless, respecting nothing but power.
"Give me control over a Nation's Currency and I care not who makes its Laws."
I am not certain of the attribution of this quote, but as my old school economics professor demonstrated to us again and again, it is certainly the case as we analyzed the development of the European Union and World Trade Organizations in a transnational fiat currency regime.
There is opportunity in these short term swings but only for those will a cool head tempered by experience. In the short term fraudulent pricing and manipulation is widespread, with deceit as their currency. For most it is better to hold to your long term trend investments and not be overextended.
I shifted the weighting in my trading portfolio out of the overweight to the short side taking profits, to overweight bullion on the dip, still hedged.
If you wonder why these bear raids happen, and why the paper bullion bankers defend certain price levels so viciously, often stepping in to hold gains to one or two percent in a day, this may help.
"Open interest in gold futures and options traded on the Comex typically exceeds supplies held in its warehouses. If the holders of just 5 percent of those contracts opted to take delivery of the metal, there wouldn’t be enough to cover the demand, Bass said."
University of Texas Takes Delivery of Bullion
The US markets cannot withstand a determined run on the assets which the banks, and funds, and probably even the Fed have already sold. The financial sector is a deepening cesspool of cover up and deception resembling a confidence scheme, an accident waiting to happen. If it did not involve so many of the well placed and powerful it would have already fallen of its own weight and arrogance.
What more can I do, what else is there to say? What wonders will persuade a people determined to be as gods? What, indeed, is truth, in times of general deception, when even the caretakers cannot be trusted to hold their sacred oaths and duties? And yet this is nothing, compared to what is to come. Walk carefully in the light of God's love, holding to His tender mercies, unless you be misled, gaining some objects and advantages, but losing yourself.
"Let him who walks in the dark, who has no light, trust in the name of the Lord, and rely on his God." Is. 50:10
AFP
S&P adopts 'negative' outlook for US debt
WASHINGTON — Ratings agency Standard & Poor's on Monday revised its outlook on US sovereign debt to "negative" from "stable", citing Washington's looming debt and fiscal deficits.
"Because the US has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said in a statement.
