of Riots and Ratings
08.08.2011 § Leave a comment
After a 29 year old man of color is shot dead by a pig in London, riots ensue overwhelming the local police, affirming that this is a generalized form of something in the current moment – echoing similar killings of young men of color which incited riots in France, Montreal (Freddie Villanueva), Oakland (Oscar Grant) and etc.
More on tottenham here.
In another realm, the US credit rating is downgraded from Aaa to Aa+. This is weird and confusing for everyone, though generally people seem to agree that it is Very Scary while simultaneously maybe being Not So Big A Deal. Check out Naked Capitalism’s take here: “Will S&P Downgrade be another Y2K scare?” An exerpt:
So why didn’t investors dump Treasuries with this threat hanging over the market’s head? Maybe investors have wised up and realize the ratings are worthless (more on that shortly). Here is a partial list of reasons:
Investors that are required to hold AAA paper can continue to rely on the AAA ratings from Moody’s and Fitch. Two ratings will suffice for virtually all users (and there were media reports of various regulated investors seeking opinions and getting waivers if they thought they might need them). In case there were any doubts, the Fed, Treasury, FDIC, NCUA and OCC told S&P to go to hell and issued a press release saying that the entities they regulated to carry on as before. Bloomberg, which provided a comparatively sanguine account, noted:
“Yields are low in the face of a downgrade because there is nowhere else for people to go if they don’t buy Treasuries because they want to be in safe dollar assets,” Carl Lantz, head of interest-rate strategy at Credit Suisse Group AG, one of 20 primary dealers that trade directly with the Fed, said before the announcement.
Investors may not be thrilled with the dollar, but the Eurozone is facing existential stresses, the yen and Swiss franc are in nosebleed territory, the yuan has capital controls (the Chinese do not want inflation stoking hot money inflows right now, thank you very much) and major investors see most minor currencies as speculative plays rather than stores of value. The greenback still fares pretty well in the beauty contest among Cinderella’s ugly sisters.
In other words: shits so fucked in economies worldwide, we don’t look so bad even though its going to pot.
Did we mention the speculation around the US as the next “low-wage haven”? ”