hidenburg disaster

“Standard & Poor’s Ratings Services today said it reviewed its ratings on 37 of the largest financial institutions in the world by applying its new ratings criteria for banks, which were published on Nov. 9, 2011″

Following Fitch Ratings decision to lower the US outlook from stable to negative, the S&P has thrown yet another bombshell after it informed in an official release post NY close that it had just downgraded 37 global banks. Goldman, BofA, Citigroup, Morgan Stanley, BNY Mellon were amongst the cuts based on a new reviewing critera it applied. Japanese and UK banks were either cut or the outlook lowered as well.

The US does not longer held AAA rating from the three agencies because on August S&P lowered the grade. US Treasuries continue to rally despite the downgrade. Recent change in the outlook by Fitch had relatively no effect on the Treasury market. “Both the action and the timing had been previously signaled by Fitch and there was no FX reaction,” said Chris Walter, from UBS Strategy. Fitch mentioned back in August that a failure of the bipartisan committee to reduce the deficit would likely lead to a negative rating.

Rating agencies are demanding the government to implement more measures to lower current fiscal deficit that is above $1 trillion on a year basis. The public debt is estimated to be around $15 trillion. The failure of Congress to make a bill that includes a credible deficit reduction plan could trigger another downgrade in US rating. According to Fitch, the use of the US Dollar as a reserve currency help the country keep its AAA rating. Source: (1) FX Street News

Global fiat currency is to blame for this mess

We hope you all understand that this whole financial services bailout episode is more accurately about further shifting the risk towards the public balance sheet and away from the once privately held. (but first they had to extract their bonuses and comp packages.)

It is the largest transfer of wealth in history! When they are bailed out once again, they will also be compensated for the mere acceptance of the bailout funds. That’s the way it worked last time and the way we’re headed again this time.

For years people have been sounding the alarm about both the size/amount of public/household debt but to no avail. We saw we were headed for the wall; as politicians crossed their fingers and hoped for the best.

Now we have the de-leveraging continued de-leveraging of small, private businesses and households and the advent of too big too jai

World debt is in the trillions, there isn’t enough energy or materials to ever generate the kind of growth that will require to repay that amount. It will NEVER be paid back.


Fractional reserve banking, interest, fiat currency have put us here. A growth economy based upon loaning money into existence and creating debt is inherently doomed to fail. You cannot have infinite growth on a finite plante. We’ve hit the wall, economic contraction for a generation is the order of the day, year, and decades.

Our best hope is aiming for a steady state economy and living within our fiscal and environmental limits.

The IMF / ECB / EU / Banks etc. are preparing for a Greek default on their debt and that’s why they want banks to get another MASSIVE “cash injection”. They don’t have the courage to come out and say it though – they want the taxpayer to backstop this.

On the US downgrade: S&P is nuts

S&P has no right to issue a downgrade because it blew it on the mortgage-backed paper. The fact that S&P did blow it during the mortgage fiasco, by continuing for years to rate junk bonds as AAA, shows just how serious the United States fiscal problems are. It covered up the problem with US government debt for years and now it can no longer do so and retain its credibility.

By the way, the Chinese rating agency Dagong already downgraded the US to A, down from AA, last November and is considering further downgrades. S&P is behind the curve and Fitch & Moody’s are like the monkeys with their hands over their ears and mouths.

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