LK has been made ill by the DC dopes and their debt ceiling double dealing. What our elected scum deserve is unprintable, unless LK wants guys in black suits showing up at his front door tonight at midnight. Charles Kannon delivers the sports as only he can.

Here’s the link.

                          

Here’s the link.

                          

In the wake of this whole debt ceiling circus, I was kind of shocked – in a humorous way of course, to learn that there is a credit rating company that actually can ruin the United States of America’s credit score.  How weird is that?  Didn’t you guys think the USA would be immune to a bunch of slug lawyers and accountants who have the power to deny the US a MasterCard?  Does this mean that Bernanke logs on to Free Credit Report.com every day?

Feeling like a real dope, I had to look into this, and it seems that there are actually three of these companies that research and analyze international finances on government agencies.  Now it seems that the big one, called Moody’s Corporation, is  considering downgrading the USA’s triple A rating because of the possibility that the debt limit will not be raised in time.  Plus, any financial institutions connected with the government -  that would be Fannie Mae, Freddie Mac, Federal Home Loan Banks, and Federal Farm Credit Banks, are also being reviewed for downgrade. And if that ain’t enough, Moody’s has also placed on review for possible downgrade pre-refunded municipal bonds, certain housing bonds that are supported or guaranteed by the US government, and other municipal ratings that are directly linked to the rating of the US government. Bonds issued by the governments of Israel and Egypt that are guaranteed by the US government were also placed on review for possible downgrade.   Man, that’s an awful lot of power!

Given that I don’t have the slightest clue of a clue about economics, cause basically it’s pretty boring stuff compared to say, the NFL, MLB, and the Deadliest Catch crabbing show, I had to look up the ramifications of international bad credit.   A credit rating reflects the risk of default.  There could be a massive outflow of foreign investment since some global funds are mandated to invest only in AAA debt and if the U.S. loses its AAA rating‚ it loses those investors.  A credit rating downgrade provides a perfect excuse for an alternative reserve currency to replace the dollar. China‚ Russia and other countries are already suggesting creating a “basket of currencies” that would replace the U.S. dollar.  Interest rates will increase as will risk of inflation. Philadelphia Federal Reserve President Charles Plosser cautions, “History shows us that you can get very bad economic outcomes with rapidly rising inflation.”  Okay, I kind of understand all that.  But, I also understand that every coin has two sides, and I really understand blackmail.

It seems in the early 1970s, S&P, Moody’s, and Fitch began receiving payment for their ratings by the securities issuers for whom they issue those ratings. Also, according to The Institute for Individual Investors, Moody’s had offered German insurer Hannover Re a “free rating”. When the insurer refused the gift, Moody’s continued with the “free ratings” anyway, but gradually lowered its rating of the company.  The German insurer continued refusing Moody’s services, so Moody’s lowered Hannover’s debt to Junk, causing the company to lose $175 million in market value in a couple of hours.  And, finally, Wall Street veteran, Chris Rowe writes, “I started underwriting big bond deals for one company that we eventually took public.  The CEO of the security issuer suggested we remind prospective investors that the bonds would eventually be given a “nice rating” by credit agencies like Moody’s, which would push the bond’s prices higher and put the firm in a better capital position.  I asked how I could possibly say that (as it seemed illegal), only to find out that the only thing the firm had to do was PAY THE RATING AGENCIES and BOOM!  Instant credit worthiness, instant price movement, and instant exposure for the company itself.”

I was right.  This economics stuff is so corrupt, crab fishing in the Bering Sea is literally a breath of honest, fresh air.  I prefer it and the people involved in it to the thousand dollar suited mobsters that make even our politicians look like innocents.  I don’t like it.  I don’t get it.  I don’t want to get it.  I won’t participate in it.  Call me a dreamer, but I will invest myself in my family, the blue sky and the yellow sun.

                          

What’s the good of repairing international relationships or fixing the domestic economy if we’re all going to become mutant X-Men due to cell phone radiation? LK and Dr. John spar and the ring is spattered with verbal blood.

Here’s the link.

                          

Here’s the link.