Monday, August 08, 2011

S&P downgrades Fannie Mae and Freddie Mac, looks at clearninghouses, state and local governments next (and soon); Dow falls on second SP announcement

The AP is reporting that Standard & Poor’s will downgrade Fannie Mae and Freddie Mac and other entities linked to the U.S.   The brief story with details, which will expand, is here

It’s likely that local and state governments could suffer downgrades from S&P as they are looked at soon, but their damage may already have been done by pension problems (such as Central Falls, RI).  Other associated clearninghouses, farm agencies, and the like will have downgrades.  

The S&P announcement Monday morning  pushed the Dow down some more, from about -200 to about -360, as an emotional reaction in the market.

Eric Kravitz has a Forbers article on S&P’c comments on the Tech industry, which may weather all of this well. Some tech companies share the hit on the Dow this morning, but it’s hard to say if this anything more than emotion, since tech stocks are volatile anyway.

Ironically, Treasury yields actually went down a little Monday morning.  Financial commentators, as on CNN, still expect only slight increases in interest rates and mortgages. 

President Obama will address the nation at 1 PM Monday.

Update: The president said, "whatever a ratings agency may say, we are still a Triple A country".

I found this story on bond prices and the downgrade on Yahoo! here, by "Zacks".

S&P seems to have become the "Umpire", despite some miserable performance in the past (as with Enron).

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