The S&P And Deven Sharma Wants To Destroy Your Wealth And Future

The S&P Credit Agency now ranks right up there as the most hated company in the world.  And Deven Sharma, President of the S&P should probably go into hiding.

President Obama is breathing a huge sigh of relief because the public will no longer only associate the market meltdown with his lack of leadership.  History will show that Deven Sharma, and his quest for fame and power rocked the market and caused millions of people around the world to lose trillions of dollars as well as their jobs.

It would be one thing if the S&P Credit Agency had any credibility by downgrading US sub-prime mortgages back in 2007.  But no.  They rode those security to the ground with their investable grade rating.  With an already frustrated public and a weak market after the debt ceiling debacle, it is absolutely low quality to go ahead and downgrade the US sovereign debt rating on a late Friday evening on August 5th after the market closed.  The S&P had already been in discussions with the White House and Treasury Secretary Geithner, and for the sake of their “principals”, they spat in our political leader's faces, as well as our faces and downgraded anyway.


You may think that this downgrade only affects the rich.  But, oh my, you'd be totally mistaken.  This downgrade affects EVERYONE!  You know what job security means?  Well you can now throw your definition out the window.  Job security now means always looking over your shoulder, working longer hours, and kissing more butt.  Expect massive rounds of layoffs before year end, especially right around the holidays.  You think you're going to get a bonus for a job well done this year?  Cut that expectation in half, and maybe, just maybe you'll be in the ballpark. Thinking of retiring sometime soon? Forget about it!

Think about the hundreds of thousands of college graduates who can no longer find work, or whose offers have been rescinded thanks to the sovereign debt downgrade.  If you were a hesitant small business owner who was worried about tax increases and an uncertain political climate, you certainly are not hiring anybody now thanks to the S&P!  If you are a cashed up major corporation, you are going to hold onto your cash like Pirate's Booty just in case another power hungry organization attacks.  Everybody, and I mean everyone is screwed to some degree.

Everybody knows that the US has debt issues.  For goodness sake, we saw Congress wrangle for months over the issue!  At least there was progress made.  More time should have been given to recover from the debacle and discuss things through with the Super Congress.  Global confidence is absolutely shattered, as markets everywhere sell-off.  We are talking a downgrade cascade that will affect every single country in the World.  Nobody feels safe anymore, not even the 40,000 baseball fans I witnessed during a workday at last weeks' Giants game.


The good times are OVER for many of us, including myself.  I'm going to try and save even more than the 70% of after-tax income currently as that's what it's probably going to take to live a comfortable retirement in who knows when now.  You'll need $4.2 million cash in the bank to earn $100,000 in interest income at today's 10-year risk free rate of 2.4%.  Savers are crushed as everybody piles into US treasuries and yields go lower.  Good luck to all I say.

You can thank not only our jokers in Washington, you can now thank Deven Sharma for destroying your wealth and trying to take away your future.  He didn't have to downgrade that Friday evening, just like Moody's and Fitch didn't downgrade.  We've got a printing press and are the world's reserve currency for goodness sake.  You can never underestimate the power of one's ego and desire for fame.  Once you taste a hint of power, it's like an addiction that makes you crave for more.  Get ready for the S&P to hand out downgrades like pancakes!  Munis, you better run and hide!

Readers, what are your thoughts on the S&P and Deven Sharma?  Would you chop of your pinky if you had a stomach ache?  Would you slice your wrists if you sprained your ankle?  Is there something about Deven we do not know about?  Did someone wrong him when he was younger and now desires to exact his revenge on the world? Could this downgrade by a great wake up call that will benefit America and the World in the long run?

PS I'm buying stocks by asset allocating 15% more into equities (~70%) post sell-off Monday in the 401K.  I suggest you asset allocate more towards equities too if you've been underweight.  S&P and Deven be damned.  They are a farce and the way to spit back is to make some money from the carnage.

S&P rated the following AAA: Sub-prime, Enron, Fannie Mae, Freddie Mac and more.  France is currently rated AAA.

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47 thoughts on “The S&P And Deven Sharma Wants To Destroy Your Wealth And Future”

  1. I agree this decision hurt our ecomony, but it was not the fault of Deven Sharma and S&P. No sir, Obama and his regime is totally responsible for this. He cannot set back and breath a sign of relief thinking he now has a scrape-goat who will take the fall for him! Americans are not asleep at the wheel anymore. We will vote he and his dangerous regime out in 2012!

  2. We are finally waking up to the India, Inc. Deception. These people HATE white westerners because of Britain’s colonization of India 200 years ago. They HATE us. Yet we have brought milkions of them into our country to take over our corporations, rob us bkind, and make off with our wealth. Until we wake up to the threat that jealous India is to us, things will only get worse! Deport these people now! Want to see what these people are really doing to the US? Google “Guest Workers Exposed Chapter 3”.

  3. Invest It Wisely

    Meh… if anything they are late to the game. Sure the US can always print the money but at what cost?

    The market is the true rating agency, anyways, and these guys usually come in after the fact.

    1. Good point about the market being the true rating agency in the long run. Too bad in the short run, I am certain hundreds of thousands more jobs will be eliminated in America at least bc of the dowgrade.

  4. Change S&P to Liberals and Sharma to Obama and this article would be correct.

    They were responsible for increasing the spending of the country more than any President in history. All that spending led to mediocre growth and unemployment rates of 9.1% and real unemployment of over 15%.

  5. It’s hard to find any positives in the current economy. There are few good investments. Job insecurity is common. If I were younger I’d take courses for a health care career that paid decently. I just hope we don’t turn into Argentina when they had their currency collapse.

  6. Interesting moves today by the Fed. Strangely enough, stocks look better now than they did yesterday.

    In any event, Sam, I think you make a very good point about layoffs in Q3/Q4. Have to agree with your prediction on that front. It will be a tough job market. Time to hunker down.

  7. I don’t think the US has deserved its AAA credit rating for a while. It’s certainly high investment grade, because it controls its own currency, but I think AAA should be used very sparingly. With huge trade deficits, growing debt, long-term deficits, and a dwindling manufacturing base, I don’t see why the US would be considered the absolute top grade.

    But I think S&P was inappropriate for doing it at this time. It’s very arbitrary, and perhaps undermines their legitimacy as much as some of their previous AAA ratings that needed bailouts in the recession. Might as well throw darts at a dartboard of credit ratings.

    Good move going into equities. I added to my equities position to keep my portfolio balanced after this market crash.

  8. Darwin's Money

    S&P Saved America.

    That’s what the history books will say in 25 years – IF either Fitch or Moody’s grow the balls to do the same thing. Basically, even with this absurdly insulting BS deal they just struck to increase the debt ceiling, even the rosiest projections from the CBO show the US is broke in the long-run. Oh, and they assume 5% GDP growth to combat S&P’s math. That gave me a great laugh. Sure, 5% GDP growth in America with our mess and Europe imploding. Yup. AAA is a complete insult. The only rationale for maintaining AAA is because we can print our way out of it whereas Europe can’t. But isn’t that a default? When the US dollar is worthless?

    As far as near-term impact, it was a total overreaction on Monday as evidenced by Tuesday’s rally; 2 of 3 agencies need to downgrade the rating in order to impact munis, and other warrants/charters, etc for pension funds and whatnot.

    I give them credit for (potentially) saving the country – because our leaders are certainly incapable.

    1. They might save the country 5 years from now, but anybody who was hoping for anything in 2011 just got royally screwed. I condemn S&P’s downgrade timing. Totally uncalled for.

      At the end of 3Q, and 4Q.. we are going to see MASSIVE layoffs. Just watch.

      1. Darwin's Money

        It’s pay now or pay later. America is insolvent. Imagine this call from all 3 agencies in 2020. It could put the 1929 economy to shame. We have time to right this. In the future we won’t.

        1. The good thing we’re all rich and cashed up right? :)

          Just wait when bonuses gets slashed and friends you know get fired. I don’t think you’ll be singing the same tune at the end of the year.

  9. Here’s another food for thought. Imagine you’ve maxed out all of your available credit and your spending is higher than your income. S&P is a quality agency doing what it is supposed to do.

    Do you not think the credit agencies will lower your credit? You and I sure as heck would not be able to keep a high credit score. Why should the government keep a perfect credit score?

    Oh, right. They’re the government. They can get away with everything.

  10. Don’t hate the messenger. S&P is doing what they are entrusted to do. They are not obligated to work with the government to prevent a credit downgrade. America is finally getting what it deserves, thanks to our government.

    Is Equifax required to discuss our credit profile before lowering our score?

  11. Warren Buffett said after the downgrade his opinion changed, not of US but of S&P! Soon after S&P downgraded Berkshire Hathaway’s ratings! :)

  12. I completely agree. I just read “The Big Short” and it pretty much shows the pure incompetence of the ratings agencies. I just finished a post for tomorrow about the ridiculousness of lower the credit rating only to see more people run to US Treasuries. Beyond that, why do you think it will have such a drastic effect on everything Sam?

    1. I’m being a little melodramatic in today’s post, however the fact remains that confidence is shattered and we’re all going into hunker down mode now. Second half of the year already so tough to find a job. Now it will be virtually impossible at the margin.

      Why hire now when you have NO IDEA what’s going to happen? You don’t, and you wait.

  13. I’m also investing for the long term and I’ll invest a bit extra this month. This is a great buying opportunity for dividend stocks. Hopefully our representatives in congress are getting an earful from their constituents about this market drop.

  14. I’m not too sure what to make of the downgrade. On the one hand, it could kick the pols into high gear and maybe they will stop doing crap that will better the immediate future for their party (like holding the debt ceiling hostage) and do what’s best for the country now and in the future in regards to the debt and debt limit. On the other hand, the S&P has absolutely 0 credibility with me after them issuing investment grade securities backed by mortgages for YEARS without hardly looking at them, and then pointed the finger around the circle when the securities blew up in everyones face. I mean at one point, they rated a package AAA and goldman sachs sold it to someone then immediately shorted it because they knew it [the bundled mortgage package] was full of shit!

  15. At this point, despite the hit to my retirement account, I’m happy it happened. I’m so desperate for our government to actually do something productive that I’m hoping something like this will actually lead to some action and decisions by the two parties.

    Would you invest in a stock that was run like our government has run itself? I know I wouldn’t.

  16. I find it interesting that S & P is getting so much attention! These are the same guys who were asleep when our economy went into the toilet in 2008. I am investing for the long term and will continue to dollar cost average into the market.

    Will any of this have some impact on Congress?

  17. Must say that I completely agree with the author. It’s understood that we have issues. That said progress was being made. To think that a U.S company could/would downgrade the very country they operate out of knowing the market carnage that would ensue was unthinkable. Checking up on Sharma reveals that he’s on U.S.- China business organization. Not a conspiracy guy and certainly not racist. That said… an Indian with Chinese relationships creating a catalyst (not creating the problem) which diminshes American credibility/clout and precipitates a market freefall (read:wealth destruction) is very disconcerting. Just another negotiating chip for Asiaas they continue to flex their large and growing influence.

    1. Hmmm, interesting conspiracy theory. Would they be as abrupt to downgrade if they grew up their entire lives in America and had all American relatives and friends if they knew carnage would ensue?

      Will be interesting to know the background of leaders at Moody’s and Fitch.

      1. jeez….i m suprised with your logic…… a rating agency should not look at the facts but just see if it’s analysts have been brought up in that country or how many relatives are from that country…….no wonder with that kind of thinking…..US is going down the dumps

        you cannot protect yourself by constantly conning others……..and the fact that your politicians even thought of default deliberately calls for even further downgrade

        1. oh come on you added to the conspiracy theory. own it. ok
          and don’t worry about where i work, worry where you work

          just re-read your article and do some thinking

          also checking into the background of leaders on moody and fitch will not help the exonomy.
          fix it and stop shifting the blame

  18. While I agree that they completely missed the boat with both the CDOs and even Enron, why is this S&P’s fault?

    Rick Santelli said it best yesterday…blaming S&P is like blaming a Ref’s bad call, it is America’s fault for letting the call go to the refs.

    1. Because we are a country who has learned to blame others for our own actions. However, what the he’ll did we individuals do wrong but elect and vote these egomaniacs into office?

      I blame you E-dog!

  19. Untemplater

    The downgrade isn’t that unexpected but yesterday’s drop was worse than I thought it would be. I agree that there are going to be more layoffs this year and it really sucks. I know I’m gonna make sure to be nicer to my boss. I want to hang on to my job even if it means zero bonus. I’m used to it now lol.

  20. Well, S&P was expecting 10 year cuts of $4 Trillion, so that did not happen. The outlook for the USA was already negative so they just followed through on their committed plan.

    I say bully to Deven Sharma because he has the spine that is apparently lacking by both sides of the aisle and the current administration. We’ve spent like drunken sailors in the quest to kick up growth for 3 years, and don’t have much to show for it besides debt. You can’t keep doubling down when you are this far behind.

    No pain free solution out there at this point. Blaming it on Sharma is a bit silly, isn’t it? The markets are rioting because now there is disagreement / deadlock, QE 2 has run out, and the downgrade just states that there won’t be an unlimited well of free gov’t money being used to flood the market. Now there is a relief rally as Bernanke promises QE3 but let’s face it, he is running out of tricks. Interest rates have been at 0.25% for 3 years. It didn’t recover the unemployment rate.

    I guess the next policy trick is to try and attempt to have negative interest rates – where we have to pay the banks for holding our cash. I guess let’s wait & see.


    1. Nope, the market is going down because of further gasolining the flame thanks to Sharma and the S&P.

      Just wait for the holidays and during bonus season. Gonna be ugly.

      I blame you and Evan for not spending more money!

  21. This whole debacle has been politically motivated from the start. Clearly, S&P was exhibiting its power when choosing to do this. It’s like watching a bunch of kindergarteners at recess. That being said, I read once about China wishing to wage economic war on the United States. Is this all part of a greater battle to take down the superpower status of the US? Will the dollar be replaced as the reserve currency?

      1. Blame them, blame Obama, blame Congress, blame the Fed, blame Greenspan, blame Bush, Blame Reagan, blame Nixon for ending gold convertibility. There is plenty of blame to go around. It is what it is now, so the best thing is to figure out what is right for me.

  22. Money Beagle

    I agree with you. My post today discusses why this downgrade is a farce. Basically, the credit rating is to judge whether we have the ability to pay our bills. This has never been a problem and there’s no indication that it is. The level of debt has nothing to do with this. In fact, where did investors put their money after taking it out of the stock market? Into treasuries! If treasuries were really so bad, this would not be the case.

  23. Joao Antunes

    With that massive debt, and the risk of default (which is now only delayed for, let’s say, months…) what could you expect?

    Of course that the consequences will be for everyone and the timing of the downgrade was quite bad, but try saying that to all european countries that have been targeted by these agencies for the past months or more…

    I’m just disappointed that only when those agencies “strike” back at your own country, you seem to realize that something is wrong with them…

    Anyway… I really enjoy reading your posts, keep up the good work! :) Best regards, from Portugal!

  24. I’ll agree that S&P (and Moodys and Fitch) lost its credibility and its legitimacy long ago.

    However, the downgrade is well merited not because America cannot pay what it owes on its outstanding debt (since it only borrows in USD and can print as much as it wants, it has the capability to pay, although the currency will be depreciated in the process), but because the country’s political leaders threatened to default “strategically”. The mere fact that the politicians threatened default is enough to make it clear that US treasuries are not a risk free investment and, therefore, should not be allocated the highest rating.

    If the politicians get their act together and take the possibility of choosing to default off the table, then America can have its AAA rating back.

    (It would be really nice if they could reduce the debt mountain, the accumulated entitlements and do some other useful things along the way, but that is a different issue.)

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