“S&P’s actions are certainly a major indicator, and they may have far reaching market effects, but until those countries and large financial conglomerates that invest in U.S. pull the plug the can will continue to be kicked down the road.
There is, of course, a breaking point, and we believe we are well on our way to that rendezvous. China, Russia and a host of other nations are aligning to eliminate the US dollar as the sole reserve currency of the world. One morning – perhaps it’ll be Monday, because we really have no idea what is happening behind the scenes – we’ll wake up and the US dollar will be in complete free fall. Actions of ratings agencies mean nothing unless the global markets react – that’s what we should be watching for.”
Via SHTF Plan
“Leona Baldwin’s husband saw it first, and she got on the marine radio to alert others in the remote Alaska village of Kivalina that a strange orange goo was sitting on top of the town’s harbor.
The news attracted all the townspeople, anxious to get a gander of the phenomenon that covered much of the harbor and then began washing ashore Wednesday.
The next day it rained, and residents found the orange matter floating on top of the rain buckets they use to collect drinking water. It was also found on one roof, leading them to believe whatever it was, it was airborne, too.
By Friday, the orange substance in the lagoon had dissipated or washed out to sea, and what was left on ground had dried to a powdery substance.”
“That delay has dragged on so long that at least one competing, not to mention superior, technology has reached maturity. Manufactured by Fujitsu under the trade name PalmSecure, it’s a system that requires no hardware on the user side. If you’ve got hands and you can wave them in front of a detector, you can use it to make purchases.
PalmSecure is a kind of identification / security scheme that falls under the umbrella of biometrics. Other biometric identifiers include your fingerprint, voice, iris, face, even the shape of your earlobe. Unlike those other measures, PalmSecure is uniquely unobtrusive. It’s literally the same gesture required to use an NFC phone wallet or to swipe a credit card, only you don’t have to have anything on your person to make it work.”
“The Tadawul All-Shares Index closed down 350.43 points 6,073.44 as all shares tumbled following a tumultous week for global markets which was capped by Standard & Poor’s cutting the US credit rating over its $14.3 trillion deficit and debt.
“The S&P rating and problems in Europe… have scared investors,” said financial analyst Abdulwahab Abu Dahesh.
The Saudi market was the first to react globally to the S&P statement late on Friday, with the start of the trading week in Saudi Arabia, while all other markets remained shut for the weekend.
Analysts expect markets in Asia and Europe to follow the Tadawul lower on Monday.
“Saudi shares have reacted to two events: sharp drops on Thursday in markets, especially oil, and the S&P cut of the US rating,” economist Mohammed al-Omran told Al-Arabiya news channel. “
Via The Telegraph
It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden
“Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.
Dow Jones just hitting the tape referencing Spiegel
German Govt: Italy Too Big For EFSF To Save – Spiegel
German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
German Govt: Italy Must Make Savings, Reforms To Exit Crisis – Spiegel
Italy Debt Guarantee Could Raise Doubts Over Germany’s Finances – Spiegel
German Govt: EFSF Should Only Help Small, Mid-Size Countries – Spiegel
As a reminder, yesterday’s stopgap announcement by the ECB to expand its SMP purchases of secondary market Italian and Spanish bonds was merely as a precursor to full EFSF monetization until its comes fully online in September (or sooner) in a vastly expanded format (between €1.5 and €3.5 trillion).
If Germany is now against this, which appears to be the case, it pretty much means, well, game over.
Add the uncerainty over the unwind of the Europe rescue “gamechanger” as one of the more naive CNBC anchors said yesterday, and Monday is now guaranteed to be a bloodbath.”
Via Zero Hedge
Reserve Currency Curse: Idea China to Stop Buying Treasuries After S&P Downgrade is Fallacious; US Would Welcome China Not Buying US Treasuries!
“Comments abound on the significance of the S&P downgrade of US debt. Some think it will affect the stock market open on Monday. I don’t, but if it does, I suggest it will last at most a day.
In “On the S&P ratings move” Bruce Krasting said essentially the same thing on the lasting effect, however he expects “interesting market action come Sunday night as this news is digested.”
Moreover, if there is “interesting action” Sunday evening, it may not have anything to do with the rating cut at all. Rather, I suspect it will be in relation to the ECB confirming it will buy Italian debt.
What got my attention in Krasting’s article was a fallacious, yet widely repeated set of statements “I don’t expect to see some big headline that says, ‘China to sell’. That’s not going to happen. The critical issue is, ‘Will they buy more?’ I doubt they will.”
The first sentence is true. However, the idea China will stop buying US debt is complete silliness.”
“Is there any kind of stimulus the US did not try in the last 10 years?
We had 1% interest rates from Greenspan fueling housing.
We had wars from Bush and Obama fueling defense industry employment.
We had two rounds of Quantitative easing from the Fed.
We had cash-for-clunkers.
We had two housing tax credit packages.
We had an $800 billion stimulus package from Congress for “shovel-ready” projects.
We had stimulus kickbacks to states.
We had HAMP (Home Affordable Mortgage Program).
We had bank bailouts out the wazoo to stimulate lending.
We had Small Business lending programs.
We had central bank liquidity swaps.
We had Maiden Lane, Maiden Lane II, and Maiden Lane III
We had Single Tranche Repurchase agreements
We had the Citi Asset Guarantee
We had TALF, TARP, TAF, CPFF, TSLF, MMIFF, TLGP, AMLF, PPIP, and PDCF
We had so many programs the Fed must have run out of letters because they were not given an acronym.
That is a partial list. Other than bailing out bondholders what exactly do we have to show for any of it? The one-word answer is “debt”.”