Investors scramble to position for expected downgrade, page 1

Investors scramble to position for expected downgrade

Fading hopes the Congress will strike a deal in debt talks any time soon have left investors scrambling to position themselves for what many now view as an inevitable downgrade of the U.S.

The two latest plans proposed by the Democrats and Republicans to deal with the deficit in the medium term are not enough to stop Standard & Poor's from stripping the U.S. of its AAA rating.

"We see a growing chance that, even if Congress raises the debt ceiling, Moody's or S&P may still cut the U.S. credit rating, based on the risk introduced by the current situation as well as the longer-term budget imbalance," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

A downgrade would not surprise me at all, the consequences from such an assessment, from what I read, is anyones' guess. People seem to think that if a debt ceiling agreement is reached then it automatically dismisses any threat of a downgrade and that is simply not true as outlined here.

I really don't know what to think of all this political theater (if it is as such) and the contentious debt ceiling debate, the back and forth blame game and so on. If it is mere theater for what purpose? One common argument I read is that it is fear mongering with the intention to generate fear among investors who get spooked by the dramatic headlines heralding imminent disaster - allowing inside investors to profit at expense of those selling off. Further, some theorists suggest that it it is one last grab before the SHTF.

I was giving thought to the possibility that maybe it is because those in the upper echelons of government and the banking cartel KNOW the bottom has fallen out of the world economies, and KNOW that the positive spin on the economic recovery is no longer a satisfactory explanation to the masses, many of who can clearly see otherwise. Instead they would rather create a massive commotion over the sovereign debt crises in a way to prepare and position themselves to at least appear like they fought to the last breathe when it all comes tumbling down.