Archive for the ‘Fitch’ Category
The sell-off is largely due to this — Fitch is now warning that unless the US Government stops running deficits it will be downgraded.
And there is no credible plan to do that, because doing so means that you must admit that the so-called “growth” and “recovery” of the last four years has been an intentional lie.
Removing the 10% deficit spending means that GDP instantly contracts by that same 10%. This is arithmetic and cannot be avoided, evaded, or bargained away. GDP = C + I + G + (x – i)
Reduce “G” 10%, GDP contracts 10%. Period.
Increase taxes and either “C” or “I” contracts by the same amount. Period.
There is no path out of this box without recognizing what we have done and accepting the accumulated damage and pain that we have taken on over the last four years, and continue to accumulate each and every day.
If we do not address this the market will. This is the fallacy of the Libertarians, Republicans and Democrats.
We are watching the start, here now and today, of an all-on meltdown in the markets as the promise of lies is meeting with the reality of arithmetic.
The other day I wrote a Ticker in which I asked how Rochdale could put on a $700 million position in Apple with $3 million in capital. The answer is that in an honest market it could not do so as it could never clear the trade. The fact is that it is reported they did, which means the market is not honest, and this is just the latest bit of evidence.
The entire market and political system are one gigantic scam. The market is now calling the bluff on the politicians and this will continue right up until someone tells the truth.
Where does it end? It doesn’t, if this isn’t stopped. It doesn’t end until all of the accumulated damage in the system, more than $5 trillion over the last four years and close to $25 trillion since 2000, comes back out.
It can either happen via the truth or the market will start to force margin calls on everyone who has those trades on and we will then find out who doesn’t have capital behind them.
The answer is, quite likely, literally nearly everyone.
Fitch has released a headline saying that the proposal to cut Greece’s public debt via a debt-swap would constitute a default (no, really?) and thus cut them from CCC to “C”.
The only surprise is that it’s not “D” yet (for Default, Dead, Dumb, Dumkoph, etc.) or “F” (for Fooked, basically.)
Looks like the “use by” date was about 24 hours…. or less…. oh, and Greece’s bond “rates” are going up, not down.
Mr. Market doesn’t buy it either.
US consumers keeps on purchasing Kindles on credit cards which they apparently have no intention of every paying off. The most recent Fitch report disclosed that October delinquencies have continued their steady climb, and together with charge-offs, are at near record highs: “Consumer credit quality remains under significant strain as a result of the persistent weakness in the labor markets,” noted managing director Michael Dean. The Labor Department will report unemployment data Friday; the jobless rate is expected to hold steady at 10.2%, the highest level in decades, while the decline in payrolls is seen mitigating from the previous month.
Dow Jones reports:
All types of consumer lending have worsened the past several years, with borrowers falling increasingly behind and lenders writing off many billions of dollars of owed loans.
Fitch’s credit-card performance indexes show late payments rising to their highest levels in five months and indicate higher charge-offs in the months to come.
Fitch’s index on delinquencies of at least 60 days rose to 4.41% from 4.22% in September. Late-stage delinquencies are now 31% higher than year-earlier levels and just below the record high of 4.45% in June. Delinquencies of at least 30 days rose as well.
As Zero Hedge pointed out, and as Meredith Whitney has voiced her concernes about, the biggest threat to the economic going into 2010 may be that not only are banks dropping reducing overall credit availability, but that ongoing credit contraction to the tune of almost $2 trillion over the next several years will mean existing credit limits are tapped out as existing ones become increasingly maxed out.
This will likely further entrench the consumer into an accelerated deleveraging mindset, and no matter what the incremental liquidity from the Fed is, the deflationary pressures will likely continue. Which means that markets will continue in full melt-up mode to compensate for real economic losses, which benefit exlusively the top percentile of the US population as the middle and lower classes continue experiencing the brunt of the credit contraction. At some point the economic reality is sure to catch up with the market surreality. That will be the point when all the flawed market policies by the Administration and Bernanke become exposed for the clothesless emperors they are.