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Who made 10 to 1 bet ($850M) on US downgrade?

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Apr 12, 2008
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real world
A mystery investor or hedge fund reportedly made a bet of almost $1billion at odds of 10/1 last month that the U.S. would lose its AAA credit rating.

Now questions are being asked of whether the trader had inside information before placing the $850million bet in the futures market, or if the bet happened at all.

There were mounting rumours that investor George Soros, 80, famously known as 'the man who broke the Bank of England', could be involved.

Read more: http://www.dailymail.co.uk/news/article-2023809/Did-George-Soros-win-10-1-return-S-Ps-US-credit-rating-downgrade.html#ixzz1UU3Ifx5t
one thing everyone must remember.. the money lost on the market does not just disappear.. someone is on the winning end of the transaction..

if the market lost 850 billion in value, that means someone or more likely a combination of someones sold stock and pocketed $850 billion

I imagine the big losers were managed funds (IRA's 401's ect).. and the winner started pulling out early last week when everyone was distracted by the "default talks"... .

it wouldn't be hard to find out who made a large gain, it will just be a matter of time waiting for the reporting.
What if Obama is right about the downgrade?
By Erick Erickson,
August 9, 2011 12:00 p.m. EDT

Editor's note: Erick Erickson is a CNN political analyst and contributor and the managing editor of RedState.com, a conservative website where this commentary was first published.

(CNN) -- Seriously. All you people on left and right, suspend your disbelief for one minute. Seriously.

What if Barack Obama was right and S&P just got it wrong.

Here's what I'm hearing and it gives credence to this theory.

S&P, I'm told, began telling some of its clients about the downgrade on Friday morning. That's why the market was so screwed up on Friday.

By Friday afternoon, the Treasury Department told S&P it had made a $2 trillion math mistake.

S&P had already told its clients about the downgrade. So it couldn't walk it back now without a major loss of confidence in its credibility.But S&P had already told its clients about the downgrade. So it couldn't walk it back now without a major loss of confidence in its credibility.

Could you imagine that conversation? "Hey . . . um . . . Joe. Yeah, Charlie here from S&P. So . . .um . . . we made a $2 trillion math mistake in our downgrade analysis. . . . What's that? You just lost $500 million in the market because of it? Oh . . . um . . . sorry Joe. Better luck next time."

So it had to come up with a different reason.

Its reason? Acrimony in Washington. In other words, it had nothing to do with the USA's ability to pay its debts or financial issues, just typical Washington politics. And it couched its statement in such a way that the tea party movement could say, "see, see, we told you Washington needed more cuts," and the left could say, "see, see, we told you we needed tax increases."

Acrimony in Washington is nothing new. Despite a lot of rhetoric about compromise this past week, it is a feature, not a bug, of the American system of government. And major debt and growing deficits are nothing new. And they are bipartisan, pre-existing, long term, and long existing problems.

In other words, nothing new.

[Acrimony] is a feature, not a bug, of the American system of government.

But S&P did the downgrade. And by any objective measure, it would need to downgrade France for the very same reasons it gave, but it has not done so yet -- though that may change.

So maybe the White House is right and S&P figured it needed to save face, do the downgrade, and come up with a loosey-goosey reason that both sides could seize on to fight it out while ignoring that S&P just made a major mistake and the country took it on the chin because of that mistake.

Now, to put my partisan hat back on.

If the White House is right and this is what happened, why the hell is David Axelrod out blaming the Tea Party Movement, a movement that at best has the support of a few dozen members of the United States House of Representatives and has only seen those members in office for six months?

That's as irresponsible as S&P, and it also does not compute if S&P is the one that screwed up.

(By the way, to lend further credence to the idea that maybe the White House economic team is right and S&P screwed up, where did investor cash flee to during the market collapse of Friday and now, it seems, again today? Why, U.S. Treasuries, of course.)
Sure Oldtimer Obama got it right :wink: :roll: S&P didn't trust the numbers Obama and the Tax cheat gave them and if you ask me I would not trust those two either. :roll: That said Moody is now revisiting their decision as they seem to be having doubts that the Government will live up to the deal made. And why would they when they have a President refusing to realize it is SPENDING that put the US on the brink of BANKRUPCY THAT RESULTED IN THE DOWNGRADE. He is out there making campaign speeches about how the Government has to INVEST in Projects to get the economy going. TRANSLATION SPEND MORE MONEY THEY DON"T HAVE. If he is re-elected you can bet his socialist, Liberal left progressive, US budget destroying agenda will be full speed ahead. And the rating agencies have to know that by his speeches to his leftwing base.

Moody's warns on US debt plan
Aug 08 2011 18:21

New York - Ratings agency Moody's Investor Service on Monday warned it might also downgrade the US government's credit rating if its planned measures to reduce its budget deficit turned out to be not "credible" after all.

In his first comments after the move by rival rating agency S&P, Moody's analyst Steven Hess sounded a note of caution about Moody's rating of the US, repeating that the August 2 plan to cut deficits by $2.1 trillion was positive for the US credit standing, but not enough to keep its rating on a stable outlook.

On Friday Standard and Poor's downgraded the US long term rating to AA+ from AAA.

Moody's had earlier put the US on "review for downgrade" on July 13 before removing the ratings watch and affirming the AAA rating on August 2, after the US Congress passed a measure cutting the fiscal deficit and raising the statutory borrowing limit.

"If the process for further deficit reduction that is included in the budget control act produces results that are not really credible, that combined with the economic performance could potentially cause an early move on the rating," Hess told Reuters in an interview.

Even the $917bn in savings that have already been agreed by Republicans and Democrats are not guaranteed in the long term, Hess said.

Those savings come mostly from slowing the growth of the discretionary programs that Congress approves annually, covering everything from the military to food inspection.

"One can have doubts about it," he said. "We certainly believe that it's credible in the near term but we can have doubts about its enforceability over the long term because future Congress can always change that."

If the United States manages to keep its AAA rating until the end of 2012, Moody's will likely take into account how the government will handle the expiration of Bush-era tax cuts to make a decision on the AAA rating, currently under a negative outlook.

Plans from the next administration for additional deficit-reduction measures will also be taken into consideration, Hess said.

Not alot of trust in this Government Oldtimer and WHY because the President has NO LEADERSHIP EXPERIENCE TO BUILD CONFIENCE ON.

Fearmongering and blame Games are not Confidence builders Oldtimer and that is all your hero has.
S&P, I'm told, began telling some of its clients about the downgrade on Friday morning. That's why the market was so screwed up on Friday.

I do not have much trust in the rating agencies,.. I felt they had to much to lose if they were honest... and their valuations were like appraisals.. based to much on emotion and to little on fact.. and this one backs that assumption up..

It was clear that some were pulling back slowly last week.. anyone with prior knowledge would have gone to a conservative position in their portfolio..

I guess S&P should now answer a few questions.. who they told.. and when..

all would be guilty of insider trading.. a crime..

Insider Trading

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

source SEC http://www.sec.gov/answers/insider.htm.

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