The Battle Royale begins

Make no mistake, the next couple of days are going to be nothing less than tumultuous.

Back in April 2011, little Timothy Geithner appeared on Fox Business (see clip above) and was asked directly about whether or not Standard and Poor's would actually downgrade the United States' triple A credit rating.

Peter Barnes: “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”

Geithner’s response: “No risk of that.”

 Barnes: “No risk?” 

Geithner: “No risk."

In an absolutely stunning move, S&P went ahead and downgraded the US credit rating.

The Federal Reserve, the FDIC, NCUA and the OCC promptly issued a joint statement which basically said S&P could go f*ck itself with it's downgrade:

• Earlier today, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations). For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, will also be unaffected.

Next the US Treasury issued a hastily written statement which claimed S&P made a $2 trillion mistake with it's assessment and that "raises fundamental questions about the credibility and integrity of S&P’s ratings action." You can read the statement here.

The war is on.

Meanwhile, in Europe, Germany is balking about bailing out Italy. Debt contagion fears are running amok.

All eyes are now on the opening of the Asian markets on Sunday (3:00 pm on the West Coast, 6:00 pm on the East Coast).

Watch for a fierce battle to be waged against Gold and Silver to dissuade nervous investors from driving the prices up parabolically.

It should be an interesting night.

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