UPDATE: most be something in the water this morning, because this sort of thing just isn’t supposed to be possible …
CNN Money (4/18 ’11): “U.S. credit rating outlook lowered by S&P”
The outlook means that there is one-in-three likelihood that it could lower the long-term rating on the United States within two years, S&P said.
New York markets down over 1.5% in early trading on this. But of course it’s all theater, as the OMB is still in denial about all that MBS and we don’t really exit Fantasyland until we acknowledge the US National Debt is really twice the present official figure 🙁
… and Tyler’s comment; Igor affirms that Doom received no advance warning on this from ZH:
That Mohamed El-Erian is the most prolific op-ed writer-cum-CEO and co-CIO of a $1.4 trillion fixed fund in history is well-known. There rarely passes a 12 hour period without Mohamed’s deep thoughts hitting the tape somewhere. Yet that El-Erian took a whopping 90 minutes to pen, clear with legal, and publish an oped to the S&P 9:00 am Eastern rating action definitively proves there was absolutely no leakage of this “earth shattering” news to anyone, anywhere.
I’d feel better if the grown-ups would at least try to hide their corruption.
Doom wonders just what bond god Mohamed El-Erian, who used to manage Harvard’s stash, thinks of this one …
Bloomberg (4/16 ’11): “Texas University Endowment Storing About $1 Billion in Gold Bars”
The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse. // “Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”
Now battle-hardened Doomers may remember The K-Bass Proposal to rescue distressed American homeowners that came out the same month (Aug ’07) that the credit crunch began(!) and looked pretty far out then, but now reads suspiciously like the actual plan the government is tending towards. So this guy is by no means as crazy as he often sounds; however, …
Giving custody of about $1B of physical bullion into the hands of any institution regulated by the NY Fed (“… and is storing the bars in a New York vault, according to the fund’s board.”) seems, **ahem**, a little dicey — in a 1690s London (oh, gee, we can’t have this stuff just sitting here not working …) sort of way, just for starters. Not only that, but it also tees up the asset for a Son Of EO 6102 exploit should Geithner get in serious trouble, which he will precisely iff this strategy turns out to be a big win.
And speaking of London, a year and a half ago the CME graciously allowed its clients to begin depositing their chemically correct Au there as collateral. So that’s the world’s two most important and reputable banking centers offering to safeguard the most important precious metal. And of course we know that their chances of ever running short of the stuff are less than 1-in-1,000,000 per century …
Hope UT’s lawyers read the fine print really carefully, and checked that their political assets are onside and rock solid 😉