S&P Global Debt Chief David Beers With Larry Kudlow On U.S. AAA Downgrade (VIDEO)
CNBC Video - David Beers with Larry Kudlow - July 27, 2011
Read the transcript at CNBC...
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GLOBAL FINANCIAL ARMAGEDDON - If U.S. Is Downgraded By Any Ratings Agency, A Technical Default Occurs And Possibly TRILLIONS In U.S. Sovereign CDS Must Be Honored And Paid - DERIVATIVES NIGHTMARE SCENARIO
The risk that few are discussing is the possible trigger of a 'default credit event' by an S&P (or Moody's) downgrade of the U.S. AAA rating. It is likely that Wall Street, and perhaps even the Fed have written the majority of CDS on the United States and they are probably unhedged given the implicit belief that the U.S. would never allow a default. Since derivatives are unregulated and not traded on an open exchange, no one knows how many billions or possibly trillions of U.S. Sovereign CDS are out there. A downgrade and therefore technical default would be the ultimate Black Swan event, and unleash a financial chaos never before seen.
Financial Armageddon 101.
Ultimately, this is why I doubt we will see a downgrade from either ratings agency despite the Obama debt ceiling deal not even meeting 50% of the target that S&P identified ($4 trillion in deficit reduction) last week as the minimum package for avoidance.
An unhedged Wall Street is certainly praying for this to be the case.
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Reader Comments (15)
http://i.imgur.com/5jt65.jpg
Yet still I had never seen that quote. I'll repeat. That was awesome. Everyone should check this out.
http://i.imgur.com/5jt65.jpg
It's a done deal.
http://news.yahoo.com/house-votes-raise-debt-limit-cut-spending-231138305.html
http://www.futuresmag.com/News/2011/5/Pages/BIS-After-contracting-derivatives-activity-recovers-in-second-half-of-2010.aspx
Lawmakers Probing if Obama Administration Meddled With S&P Rating
http://www.thegatewaypundit.com/2011/07/lawmakers-probing-if-obama-administration-meddled-with-sp-rating/
Is the debt ceiling drama really all about the GSEs?
http://ftalphaville.ft.com/blog/2011/07/18/625306/is-the-debt-ceiling-drama-really-all-about-the-gses/
Corporate Crime, Russia, Peter Orszag and Getting Away with Murder
http://corporatecrimereporter.com/morgenson07282011.htm
Obama's Budget Has One Small, Missing Piece.... For $6.3 Trillion Dollars
http://www.zerohedge.com/article/obamas-budget-has-one-small-missing-piece-63-trillion-dollars
Is Fannie bailing out the banks?
http://finance.fortune.cnn.com/2011/01/03/is-fannie-bailing-out-the-banks/
Economics of Contempt tweets:
Note that the President and Congress will be allowed to use supplemental war approps bills to bypass the sequestration. Loophole city.
more
http://www.economicpolicyjournal.com/2011/08/oh-just-in-case-you-fear-debt-deal-may.html
http://flaglerlive.com/17961/jigme-norbu-killed-florida
http://abcnews.go.com/US/nephew-dalai-lama-hit-car-walk-tibet-florida/story?id=12922284
Moody's: Likely to Back US Rating If Debt Ceiling Raised
http://www.cnbc.com/id/43970508
This still really ticks me off buffet had share's in Moody's
Buffett’s Betrayal
http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/
Warren's Billions Thank Uncle Sam For Bailing Them Out
http://www.zerohedge.com/article/warrens-billions-thank-uncle-sam-bailing-them-out
Third Way Document Proves Democratic Party Supports Institutionalized Looting by Banks
http://www.nakedcapitalism.com/2011/07/third-way-document-proves-democratic-party-supports-institutionalized-looting-by-banks.html
Agreed on the failures of the ratings agencies no question, but the US deserves to lose its AAA rating. The sooner the better in fact. We have earned it thru wanton fiscal mismanagement. And losing it might help wake up Washington to the reality of the budget nightmare. Then perhaps we will finally cut defense and the war machine. It's the simplest place to start cutting.
he sold off his gold a couple months ago.
He tanked the GB pound a couple years ago.