Starting Over

It's a strange place to still be blogging on this site. Two offers received; two offers rejected. I made the decision to say no, and I have to live with it. I guess I decided to gamble on something that was far more important to me. Sadly, I lost that gamble. And now I'm back to the FS process. I have stayed away from the A-100 boards, so I have no idea what the registers are like anymore. Given that the economy is still treading water, I can't imagine they are very short. When I take the exam again in February, I will sign up for the econ register again I imagine. Although, and this is somewhat funny, my experience as a professor has me leaning towards the consular register. Never thought I'd say that - but my feelings about consular have changed quite a bit. Maybe it's that I feel a need for service to my fellow man, and the consular track does seem like the most hands on with respect to helping others. But who knows - that is an impression of the outside looking in. Maybe it's completely different. One of my former study buddies, a PD track FSO, hated his consular posting and felt like it was all about getting through X hundred plus applicants a day and not about doing good work. Funny, I do feel like I'm following the bubbles. First, as a structured finance attorney. Second, as a law professor (apps have been declining tremendously). Now, I'll probably be applying for a job in the government just in time for some massive budget cutting/hiring freezes.

Never Thought I'd Live to See This

Despite decades in the finance world, and being disturbingly familiar with rating agencies and their rating requirements, I never thought this would happen. Not in my lifetime. Even though it's been inevitable, literally inevitable, for a couple of years now. The only thing preventing an earlier downgrade has been political pressure. And, obviously, even that won't work anymore.

Expect Moody's to downgrade the US in the next six months.* And I'm not even really sure what's going to happen next. There are literally BILLIONS and BILLIONS (maybe even TRILLIONS) of dollars that are required, absolutely required, to be invested in AAA debt - particularly pension funds. And there's not a lot of AAA debt to be purchased anymore. So who the hell knows what's going to happen when the Moody's downgrade comes (most finance/debt investment deals need downgrades from 2 or more rating agencies before triggers require the money to be invested elsewhere). I have no idea what money will chase - maybe German debt? This will impact the banking system - expect banks to get downgraded, too. And I imagine on Monday the market will sink (unless the last couple of days it has been pricing this in).

Bleh.

The only positive things I can see about this, which doesn't help my FSO dreams at all, is that this might...maybe...God I hope so...get the politicians to get their heads out of their asses and manage both the debt and the budget in a meaningful way. Also, counter-intuitively, there might be a flight to treasuries - a lot of investors will go where they think there is safety, no matter what the return may be.

Can I say it again? Never thought I'd live to see this. But then, I never thought I'd see Lehman...frickin' Lehman, go the way of the dodo bird.

*For those not familiar with rating agencies, S&P is generally the leader in establishing ratings and Moody's generally rates in lock-step or soon follows S&P - Fitch, in my opinion, is a me-too rating agency that does whatever the other two do.