Is hockey-masked killer Jason Voorhees the new President of Standard & Poor’s Ratings Services? It would seem so, as on this day, Friday the 13th, it was reported that S&P is downgrading the credit ratings of 5 European nations.

In a decision that is expected to be announced around 4:30pm EST, S&P will

• Downgrade France one notch, from AAA to AA+
• Downgrade Austria one notch, from AAA to AA+
• Downgrade Italy to BBB+
• Downgrade Spain two notches
• Downgrade Portugal two notches

Officials say that Germany, the Netherlands, Finland, and Luxembourg will keep their AAA ratings intact.

The euro fell more than 1 per cent to a 16-month low against the US dollar; US stocks are down in reaction to the slashing; obviously not huge fans of horror movies. (And what is the world economy if not one unstoppable horror franchise?)

Said French Finance Minister François Baroin:

“It’s not good news, but it is not a catastrophe. It is not the ratings agencies that dictate the policy of France.”

Hmm, sounds suspiciously like the countless police, camp counselors, and teenage campers who refused to believe that the local woods slasher is still alive and kicking.

Sources: CNBC, New York Times, Financial Times

Remember when the DOW dropped 500 points last Thursday? Remember when “people” were saying “Hey, there, kid! It’s a tremendous buying opportunity! Oversold!! Buy the dip!!”

Well, I really hope you didn’t listen. Because falling knives are really sharp. Since the United States got downgraded Friday by S&P from AAA to AA+, things have taken a turn for the worse. The DOW closed down 634 points today, a 5.5% decline. If you think that’s bad, the Nasdaq suffered a 6.9% drop and the S&P 500 was down 6.66%. That’s three sixes, which obviously means Satan is involved.

Or maybe it’s not Satan but that damn S&P that just has it in for us, or maybe it’s our political system, as Obama told us early this afternoon. The president said “No matter what some agency may say, we’ve always been and always will be a AAA country.”

And after that short speech, the markets dropped further.

As Zero Hedge stated, this was the 6th largest drop in Dow Jones history. That’s awesome that records are being made!

And we hope you really stayed away from Bank of America, which dropped 20% today. But maybe Cramer still likes it. Buy the dip!

Off the road. On the booze.

Some more funny items I saw today:

• The Onion: Drunken Ben Bernanke tells everyone at bar how screwed economy really is…
• Michael Moore wants Obama to arrest the CEO of Standard & Poors!
• The president quoted Warren Buffett as saying the United States is a “AAAA” country. The S&P, of course, marked the outlook for Berkshire Hathaway from stable to “negative.”
• Tim Geithner says that the S&P has “shown a stunning lack of knowledge about basic US fiscal budget math.” LOL.
• BofA says they don’t need to raise capital. (Right.) On a related note, I have heard rumors that people are raiding ATMs to get their money out of BofA as fast as possible. Can anybody confirm?
• Final LOL: Cramer still has a job.

-Bill

It’s my birthday, but I guess I should give up hope of anyone buying me any drinks or getting any presents, given this bloodbath. Now that the dust has settled, it looks like the DOW is down over five hundred points, with fail of similiar magnitude in the Nasdaq and S+P.

What happened today? Interventions in the Japanese and Swiss currency markets? Check. Forecast for higher unemployment when the numbers come out tomorrow? Check. QE3? Yes, we can haz. Oh and that whole debt and downgrade thing. So we might’ve broken an eight-day losing streak yesterday, but today, not so much.

Given the volatility index is also through the roof, who the knows what’s next… any bets for tomorrow?

FED Chairman Ben Bernanke told Congress today that the economy is growing more slowly than expected, and should this anemic growth continue, the FED is ready to launch more stimulus.

“given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate.”

Source: CNBC

I translated this statement and out came QE3.

The markets seem to have come to the same conclusion, as the major indexes are all up over 1% as of 1:30pm. Gold has jumped to 1585.60.

Speaking of Gold, Ron Paul asked the Bernank an interesting question:

Paul: Do you think gold is money?
Bernanke: (pause) .. No.
Paul: Even if it’s been used as money for 6,000 years… somebody reversed that? Eliminated that economic law?
Bernanke: Well, it’s an asset. Would you say treasury bills are money? I don’t think they’re money either.
Paul: Why do central banks hold it? Why don’t they hold diamonds?
Bernanke: Well it’s tradition. Long term tradition.
Paul: Well, some people still think it’s money.

Classic Bernank!! Sure, the banks could hold gold out of “tradition” but we never really got an answer from Ben on why he thinks gold isn’t money. Is gold a medium of exchange? Is it a store of value? Does Ben even understand this, or is gold just an intrusion on his fiat-money fantasyland? Who knows?

-Bill

PS: Alyx just informed me that we went through something similar in March.