Freaky Friday

2011 August 11
by Wesbro

By Wesley M. Brown

I am a paranoid person by nature I admit. I can spin a conspiracy with the best of them, and have spent some years studying historical conspiracies in my own amateur fashion.

After the whole sordid “debt ceiling” debate, none of us should be surprised that at least one of the credit agencies would decide to downgrade our nation’s credit score from AAA to AA-plus ( I note that despite our soon to be $14 trillion dollar debt, the federal government’s credit score is STILL better than mine…but I digress).

But, what has me stumped is not WHAT S&P did, but WHEN they did it.

If everyone expected at least one credit agency to call bullshit, the WHAT of this affair was not shocking. However, I find it entirely curious that they elected to make the announcement just after the markets closed this past Friday, when NO ONE could do anything about it until Monday. Or could they?

I asked a few friends who are financial people to explain it to me. They believe that the timing was purposeful. If S&P had made the announcement on Tuesday, then there would have been a major panic and selloff immediately.

However, that makes little sense to me. The selloff started on Friday with the expectation that there would be a credit downgrade. It has continued each day since Monday, and the shockwaves may have spread to European and Asian markets as well.

Thus, it appears that a panic would have happened no matter when the announcement was made.

As a believe that players in any given game will strategize to achieve the best results for themselves, I believe that S&P issued the announcement to give the financial players time to decide on their Monday morning strategy. For financial players that usually must make quick decisions when millions and billions of dollars are on the line, 48 hours of planning to them is equal to a lifetime for anyone else. In short, the Wall Street sorts knew exactly what to do this week.

Were our market an essentially closed system, I wouldn’t care. But, as our economic system has developed, these markets really affect the average citizen in countless ways. Billions of dollars are invested both privately and publically in the stock market. All layers of government turn to the stock and bond markets for both investing and borrowing reasons, and this type of volatility affects us deeply.

Had the financiers not been responsible for the mortgage crisis, I would be more than willing to trust their expertise. Had they not demanded trillions of dollars to bail out insurance companies, mortgage lenders, and car companies to minimize the consequences of their own mistakes, I would be more than willing to let the market settle itself down and let all of us get on with the business of making money.

But, this volatility is at least a part of their own creation. The “market” has now broken its chains and is off terrorizing the villagers. Given the willingness of Congress and the President to essentially give the players anything they want, it may now be time to break out the hay rakes.

2 Responses leave one →
  1. August 11, 2011

    Wes,
    With you on the Hay rakes…time to tame the beast and help Frankenstein’s monster rest peacefully.

  2. August 12, 2011

    Wes,
    Check this out…I think you will agree and like it very much.
    http://news.yahoo.com/blogs/cutline/video-msnbc-dylan-ratigan-meltdown-over-meltdown-031046281.html
    Seems to hit the nail on the head.
    Roy

Leave a Reply

Note: You can use basic XHTML in your comments. Your email address will never be published.

Subscribe to this comment feed via RSS