Uncharted Territory

Posted: August 6, 2011 in Business, Technology and Business
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To quote the phrase that absolutely everyone is using:  We are indeed in uncharted territory.

The U.S. got downgraded yesterday after the markets closed… from AAA to AA+.

Everyone is expecting a blood bath on Monday.

Everyone is also blasting S&P for the downgrade… for a lot of really good reasons.

But in reading through the many, many rebuttals to the S&P on this… again, many with perfectly fine logic… I’m struck by the surprised, defensive tone.

Let’s call a spade a spade:  Everyone blasted S&P for blowing it during the 2008 meltdown.  This time around, S&P got their rating-agency act together and was crystal clear about what it thought would be a responsible response.  Other than Obama, who took the S&P threat serious from Day 1 and was constantly reminding the American pubic we needed to avoid a downgrade, our collective politicians simply didn’t take S&P serious.

And now that S&P is doing exactly what they said they were going to do, the politicians are crying about it?

Give me a break.

What’s going to happen on Monday?

Everyone believes the markets are going to get creamed (on top of the crashing they did last week).

This is never a comfortable position to take — in fact, it’s downright uncomfortable! — but whenever everyone thinks one way, it usually ends up the other.

The market has a way of pricing itself based on what it sees in the future… the deficit is out of control… spending is out of control… maybe this downgrade is exactly the slap that the U.S. — and by extension, the world — needed?

The market may just, in fact, kinda like that.

At least, for now…

… because while we may not get creamed on Monday… it does feel like there’s just a lot broken with the world right now.

So, will we be up?  down?

I think we’re in for a gut-wrenching rollercoaster ride that will ultimately take us into the 10,000’s on the Dow… right between a crash and record close… right where we should be:  The world isn’t ending (unless oil spikes!)… but we have a lot of fixin’ to do.

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