Following Friday night’s credit rating announcement by S & P Chairman John Chambers, the T-Room will be capturing and posting hotlinks throughout the day to capture the market’s reaction.
Some in the industry have termed today as “Bloody Monday” which by all accounts appears appropriate given the headlines already appearing and it’s only 10:06 am.
To give you a bit more context as to what is happening and how Congress seems to be benefitting personally from all of this, we kick off this post with a “Government Gone Wild” video highlighting those congress critters, who are now on the “List” and the millions they are making to enrich themselves by betting on your losses –
Also from Government Gone Wild is this release “The Downward Spiral” and here’s a quote –
“On August 5, 2011, unfortunately this prediction came true when S&P officially downgraded the long term credit rating of the U.S. stating, among other reasons, that our government’s ability to manage its finances is “less stable, less effective and less predictable.”
For the better part of the last 18 months we have been called liars, racists and fear mongers. We have been relentlessly attacked by the left and big government apologists trying to protect their own interests. The current administration, which is used to blaming other for their shortcomings, is now blaming S&P for mathematical errors in their downgrade.”
Read the full release by clicking HERE
US markets fall sharply after S&P downgrade
By STAN CHOE
AP Business Writer
NEW YORK (AP) — The U.S. stock market joined a sell-off around the world Monday in the first trading since Standard & Poor’s downgraded American debt and gave investors another reason to be anxious.
The Dow Jones industrial average fell more than 250 points minutes after the opening bell on Wall Street. It recovered some of those losses, then fell again and was down 295 points in mid-morning trading.
Stock markets in Asia began the global rout. The main stock index fell almost 4 percent in South Korea and more than 2 percent in Japan. European markets opened later and fell, too, with Germany down 3 percent and France 2.5 percent.
It was the first chance for global investors to respond to S&P’s announcement late Friday that it was reducing its credit rating for long-term U.S. government debt by one notch, from AAA, the highest rating, to AA+.
Click HERE to read the rest of the story.
h/t Zero Hedge
From Financial Times –
US stocks sharply lower in fresh sell-off
By Jamie Chisholm, Global Markets Commentator
Monday 14.30 BST. Traders are flooding into gold while shedding stocks and industrial commodities as global markets gyrate following the downgrading of the US credit rating.
Intervention from the European Central Bank in the eurozone bond complex helped take some of the sting out of the broader sell-off as European markets opened.
Click on headline to read more. Know, the Financial Times is a free subscription and their work on financial news is top notch.
David Walker – The FED Is Self Dealing Treasury Bonds
Over the weekend, former Fed Chairman Alan Greenspan pretty much captured all of this in a nutshell…the US can’t default b/c it can just print more money…yep, he said it and w/a straight face…I’m sure by now you know that by flooding the market w/more paper results in devaluing of said paper…
And here’s CNN’s reporter Richard Quest takes Greenspan’s quote this morning on Meet The Press and explains how to solve the debt crisis. “You Just Get The Printing Press’s Rolling”
From NPR –
August 8, 2011
Standard & Poor’s Ratings Services on Monday downgraded the credit ratings of mortgage lenders Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.
The agency also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
All the downgrades were from the top rating of AAA to AA-plus. S&P says the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term U.S. debt. Their creditworthiness hinges on the U.S. government’s ability to pay its own creditors.
Stocks plunged further after the downgrades. The Dow Jones industrial average fell nearly 300 points, or 3.2 percent. The S&P 500 stock index tumbled nearly 5 percent. Investors seeking safety drove gold prices up and Treasury yields down.
Click on headline to read the rest of the story.
With Bank of America investors finally realizing it is game over for the company as a going concern, at this point there are just two options for Brian Moynihan: the spin off of CFC as a bad bank, backstopped by the Fed, or, well, Chapter 11, which for a bank is essentially liquidation (and with CDS trading up 50 bps to 260 a bankruptcy seems increasingly inevitable). It also means that another TARP is on the way. And once America realizes that another several trillion have to be put into its insolvent banking sector, it will get quite violent. The biggest irony: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.
Click on headline to get up to date on AIG filing suit last night against Bank of America.
Asian Markets react to S & P downgrade –
Asian stocks tumbled early on Monday, kicking of what is a string of torrid trading around the globe. It follows last week’s rout and is on the back of America getting its credit rating cut, as well as the Eurozone’s debt wound that refuses to heal. RT’s Priya Sridhar is in Asia’s third largest economy, India, with the latest outlook.
Posted at 2:31 pm today, CNBC is reporting “Stocks accelerated their selloff in heavy volume Monday as investors fled from risky assets following S&P’s downgrade of U.S.’s credit rating last week in addition to ongoing uncertainty over the euro zone crisis.”
The Dow Jones Industrial Average dropped sharply to break below the psychologically-significant 11,000 mark, led by BofA [BAC 6.675 -1.495 (-18.3%) ] and Alcoa [AA Loading… () ], after logging its steepest weekly decline since Mar. 2009 last week.
The S&P 500 and the tech-heavy Nasdaq were down almost 5 percent. August is already on track to be the worst day for both indexes since Oct. 2008.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, spiked above 40 for the first time since May 2010.
Read the rest of this post by clicking on HERE
Here it comes…first Zero Hedge and now the Financial Times…
By Robin Harding in Washington
The US Federal Reserve’s meeting on Tuesday is likely to be one of its most difficult and divisive since, well, last August.
Sharply weaker economic data in recent weeks, a new peak in the eurozone debt crisis, and a downgrade to the triple A credit rating of the US have shaken confidence in a way that could spiral towards a new recession. The Fed will be forced to consider fresh stimulus in response.
Click on headline to read the full story.