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Discussion Starter · #1 ·
I'm sure most of you noticed the news about the big drop in stocks on Thursday, and then the S&P downgrade on US status as of Friday evening.

I was expecting a downgrade even though the debt ceiling deal went through because they didn't cut enough from the budget, according to S&P, but I thought it would take a few more weeks for that news to hit the fan.

So my question for the day is this...do you think the stocks will take another plunge on Monday?
 

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The Future?
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The world market will dictate what happens on Monday. My thoughts, it will take another plunge.
 

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Spiritual Prepper
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S & P downgraded us to AA+
China (using their own rating agency) downgraded us to a single A.
And they hold most of our debt. So yes, I also expect the market to continue to slide.
 

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Implications of downgrade by Deutchbank.

It took me a bit to realize I could post an attachment.
My buddies wife had sent me this, she works for a foreign bank (not Deutchbank, and I know thats not spelled right and Im not looking it up even though Im a stickler for spelling) on Wall St in NYC. Its a presentation given to their brokers on the implications and likelihood of a downgrade.

Basically our economy hinges on the rest of the world, China specifically, loaning us money. We couldnt have put ourselves in a more precarious situation.
If China has us rated as an 'A' only, why would they buy our bonds?
 

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Discussion Starter · #6 ·
Interesting stuff. According to that pdf presentation, a one step downgrade does not have a huge effect on financial outlooks. But the stock market seems to react differently...buying when I think it is not prudent and selling at the drop of a hat.

I guess we'll see what happens on Monday. And only time will tell if Moody's and Fitch downgrade the US too. It seems somewhat unlikely at this point.
 

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performing monkey
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with all the 'e-traders' and uninformed individuals in the market now, isn't this simmilar to what happened in the 30s (people sold the second things got bad, making it worse and thereby losing everything) ?

my philosophy is to buy low, and NEVER sell ;)

jk, but it IS only a 'loss' if you sell

I guess many forgot the 'discretionary monies only' rule
 

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Discussion Starter · #8 ·
with all the 'e-traders' and uninformed individuals in the market now, isn't this simmilar to what happened in the 30s (people sold the second things got bad, making it worse and thereby losing everything) ?
Yes, although now that we are 'conveniently' connected through cyberspace, it happens a lot faster.

I think we can expect a pretty unstable week starting on Monday. I don't think that it will shake down into everyday living right away. But I expect that the most likely effect on average citizens will be more rounds of layoffs coming up in the next couple months, which will cause Wall St to panic more, which will lead to more layoffs.

It may lead to some bargain stocks, but then you never know when the market hits bottom, so you may lose a lot of value short term. Like you said, Blob, don't sell those stocks unless you want to lose $.

I, for one, am investing in chickens...they pay me in meat and eggs...and entertainment. Maybe I'll buy me some ducks too. And canning jars, definitely need some more canning jars.
 

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just read that china wants to make a "global reserve currency" . since they hold so much of our debt I find this scarey. they also want us to cut our military spending and our social programs. double scary.
 

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Yes, although now that we are 'conveniently' connected through cyberspace, it happens a lot faster.
Not only faster, but there have to be billions more shares, and (b?)millions more investors now than there were back then.
 

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Discussion Starter · #11 ·
just read that china wants to make a "global reserve currency" . since they hold so much of our debt I find this scarey. they also want us to cut our military spending and our social programs. double scary.
They have been meeting behind our backs to change the reserve currency from US Dollars to a basket of more stable currencies for quite some time. They got together with Russia and decided to bypass USD altogether in their transactions with each other...I think that was earlier this year, or maybe last year....I forgot.

I can understand why other countries would want to kick the USD out and go for a more stable basket of currencies, like the Swiss Franc, etc. Seeing how our country is undermining our own economy by printing extra money, causing inflation, arguing amongst ourselves and generally causing lots of problems for the rest of the world. Can't say I'm too proud of the leadership these days. But if the reserve currency changes, we will have short term (if not long term) instability in this country.

Yeah, just can't imagine why China would want us to cut our military spending, can you? And that is exactly what will happen with this budget cut deal, if they can't come to a compromise in time...gee, now there's some inspiration for ya. :gaah:
 

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Discussion Starter · #12 ·
Reading the news today, it looks like all of the financial news is agreeing with my intuition that the stocks will plunge tomorrow (not that I am all that cutting edge on these things). It's already starting with Tel Aviv and Dubai. Wall street is calling on investors not to panic, and G-7 leaders are teleconferencing on how to stop a market crash.

Germany doesn't want to bail out Italy...so the European debt crisis is getting worse, and all of their leaders are on holiday....hmmm, so are ours, for that matter. France is in line for the next credit downgrade.

Add to that the fact that BofA has let the cat out of the bag on their mortgage liabilities being much worse than they were letting on...I think we are in for a very wild ride tomorrow...straight down.

Sorry to be depressing, but I think that this is going to be worse than the last crash.
 

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with all the 'e-traders' and uninformed individuals in the market now, isn't this simmilar to what happened in the 30s (people sold the second things got bad, making it worse and thereby losing everything) ?

my philosophy is to buy low, and NEVER sell ;)

jk, but it IS only a 'loss' if you sell

I guess many forgot the 'discretionary monies only' rule
Nobody should be in the stock market right now. It's headed for a crash. There's something to be said for getting out when you can with as much as you can. We can't do anything about my wife's 401k. Her money is in various stock funds. I wish we could use it to buy gold coins but that's not an option.
 

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The Future?
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:shtf::shtf::shtf::shtf::shtf::shtf::shtf:enough said..
 

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Yeah, just can't imagine why China would want us to cut our military spending, can you? And that is exactly what will happen with this budget cut deal, if they can't come to a compromise in time...gee, now there's some inspiration for ya. :gaah:
I would counter that China would be only too happy if we continue to spend money on our now unsustainable military. We are stretched very thin with all of our wars in the middle east, they realize we are no threat to them militarily, nukes notwithstanding. In its current state, the military industrial complex is a huge drain on our economy. China doesnt need to go to war with us, they could easily pull the rug out from under us in a number of ways. They loan us a ton of money, have taken a ton of our manufacturing jobs, and import tons of goods here. They could just cut us off in one of these areas and we would be screwed.
 

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I was listening to cspan radio this morning, and they said that S&P is considering dropping our rating further, citing the fact that no efforts have been made to correct the situation.
 

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I was listening to cspan radio this morning, and they said that S&P is considering dropping our rating further, citing the fact that no efforts have been made to correct the situation.
 

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Discussion Starter · #18 ·
I agree that China knows that we are not a military threat, because they hold so much of our debt that no one in our gov will stand up to them. But I think that they would like to see us demoralized and demilitarized to a certain extent, plus it would mean that we might start paying them back some of that debt.

And yes, Turtle, I also saw that the S&P has threatened a further downgrade, also Moody's has given us a negative outlook too. What happens next all depends on budget cuts and income (taxes) raised in the coming month.

I had a feeling that the stocks would plunge today, but I really hate being right about these things.
 

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From here, damn good explanation.

The U.S. debt downgrade.
Republicans are already calling it "The Obama Downgrade." Democrats are calling it "The Tea Party Downgrade." And the Treasury is calling it a disgrace--brought to you by the same incompetent idiots at S&P who rated junk housing bonds AAA.
So who's really to blame?
All of the people who are pointing fingers. And American voters, who elected them.
Regardless of what you think about the timing or specific logic of S&P's downgrade, there's no question that the U.S.'s financial position has deteriorated massively in the past 10 years. And last week, a significant portion of the American government was ready (eager?) to force a default in the debt-ceiling debate just because it wasn't getting EXACTLY what it wanted.
Given those two factors, the debt downgrade was perfectly reasonable. And as much as politicians try to blame it on "the other guys," they're all responsible. As are we, for hiring them.
One incumbent the downgrade is almost certainly bad for is President Obama, which is probably why the Treasury is screaming so loudly trying to pin the blame on S&P. It also seems reasonable to think that the downgrade, combined with the still-lousy economy, will hurt Obama's chances of getting re-elected.
We can only hope that, if Americans do vote for "change" in 2012, we don't elect an extremist in his place. Other countries in similarly tough economic circumstances have done this, and the result has been disastrous.
 

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Whats funny in all the statements I have been reading over several of the past days is the typical blame game. What I have NOT seen is us calling in debt OWED to us... Strange.
 
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