I'm not able to watch the squawking cable news media or listen to talk radio, so I wonder... Are Americans being told the truth, are they indeed absorbing the irony of what happened over the past few days?
Background, in case you've been living in a cave in Tora Bora: Last week, S&P downgraded U.S. Government debt from its highest rating of AAA one notch down to AA+. Deficit fetishists remarked with poorly concealed glee that this was proof of America's imminent day of fiscal reckoning. And of course Obama got most of the blame, even though idiotic S&P cited Washington politicians' inability to craft a coherent fiscal policy as the other main reason for its dubious downgrade -- and, as we all know, fiscal policy (spending, debt, and taxes - Section 8) is, constitutionally speaking, Congress's job.
I'm just ignoring for a moment the S&P's $2 trillion error in its math; or that S&P may broken SEC regulations by leaking news of its imminent downgrade to favored hedge fund traders who stood to make a buck on insider knowledge; or the fact that S&P was rating subprime crap AAA and gave Lehman an A rating a month before its collapse, which was a big reason for the Great Recession and the subsequent fiscal crisis which caused S&P to downgrade U.S. sovereign debt.
No, I'm ignoring all that for now.
What I want to highlight is the irony of how the markets reacted. You know, those all-knowing, self-correcting, magical markets which are best at everything? Yeah, well, after a panic of selling off stocks (the Dow, S&P 500 and NASDAQ all tanked, not to mention international indexes), which was spurred, in part, by the S&P downgrade of U.S. Treasuries, investors tripped over themselves to put their money into... U.S. Treasuries. And so interest rates on U.S. Treasuries dropped to new lows.
In other words, a ratings crisis for U.S. Treasuries led to an abandonment of stocks and a boost in U.S. Treasuries.
I'm no market guru by any stretch, but if there's a time to buy stocks it's probably now, because this makes no f***ing rational sense.
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