What's new

S&P downgrades U.S. credit rating from AAA

This day marks the fall of an empire

Ahem..Some will consider it a wake up call and finally a push for America to get it's **** together. Returning back to motherland now, Farooq? I find it fascinating that so many America haters move to America for "economic" reasons and praise their motherland ad nauseam (land they left behind) and yet they don't leave US. Fat lady will sing when I see people actually leaving.
 
I am guessing Aramsogo is packing his bag and leaving for China? Can I say goodbye at airport? When are you leaving, man?

Heh he's probably rich enough to get himself a place in a hyper-gated community when the societal order slides into nothing.
 
As we approach Treasury’s debt-ceiling deadline, attention has shifted from the risks of a default on Treasury debt to the risk of a downgrade of U.S. credit. Many are asking whether a downgrade could itself lead to a financial crisis. With the example of 2008 still fresh in many minds, the question has become: Would it be as bad as the Lehman Bros. bankruptcy?

Some market observers speculate that a downgrade would be a non-event: Japan, for example, went from a rating of AAA to AA without much drama. Others suggest that a downgrade would increase Treasury’s borrowing costs by $100 billion a year or more, making our already unsustainable deficit trajectory even worse.

These factors suggest that a U.S. downgrade has the potential to be as bad or perhaps worse than the Lehman shock. The more strongly held a belief, and the larger the asset class it supports, the greater the potential damage to the economy when the belief is turned upside down. We may not be certain what will happen if U.S. credit is downgraded, but there is no upside to finding out.

Could a U.S. debt downgrade trigger a financial crisis? - The Washington Post
 
So you're not of the Keynesian school of borrowing more to grow your way out while the credit is cheap (still cheap isn't?)

Hard to grow your way out when current rates are negative and real growth can't even exceed 1% now. The US doesn't practice Keynesian economics. No effort has been made to employ people even in make-work programs. In fact, they accelerated moving jobs overseas.
 
Hard to grow your way out when current rates are negative and real growth can't even exceed 1% now. The US doesn't practice Keynesian economics. No effort has been made to employ people even in make-work programs. In fact, they accelerated moving jobs overseas.

Short sighted. :(
 
I am more concerned about progress of science/technology. Europe/US is engine that drives science in the world. Without them....dark ages are coming back.
 
I am guessing Aramsogo is packing his bag and leaving for China? Can I say goodbye at airport? When are you leaving, man?

I'm in no rush. Like I said, I believe the transition will take 20 years. It doesn't happen overnight. I'm fully hedged anyways. I'm a dual citizen with permanent residency in a third country.
 
I am more concerned about progress of science/technology. Europe/US is engine that drives science in the world. Without them....dark ages are coming back.

You really look up to the Westerners don't you?

Don't get me wrong, I admire them for their achievements. But to say that the world will go back into another "Dark Ages" because the West is no longer growing, well I think you are underestimating the non-Western people of the world.
 
Hard to grow your way out when current rates are negative and real growth can't even exceed 1% now. The US doesn't practice Keynesian economics. No effort has been made to employ people even in make-work programs. In fact, they accelerated moving jobs overseas.

Reading this again, I guess it really mean the US government has no more economic tricks in its bag.
 
Ahem..Some will consider it a wake up call and finally a push for America to get it's **** together. Returning back to motherland now, Farooq? I find it fascinating that so many America haters move to America for "economic" reasons and praise their motherland ad nauseam (land they left behind) and yet they don't leave US. Fat lady will sing when I see people actually leaving.

Wither we like it or not The Us economy is in decline and without money the US can not buy military equipment or give aids (bribes) for loyalty anymore either (they are already stopping on doing that) which means the US now has to close down on itself and begin another era of isolation until they (get their **** together) the US will still play a role in international politics but now it wont carry the same weight it did in the previous era.
 
Ahem..Some will consider it a wake up call and finally a push for America to get it's **** together. Returning back to motherland now, Farooq? I find it fascinating that so many America haters move to America for "economic" reasons and praise their motherland ad nauseam (land they left behind) and yet they don't leave US. Fat lady will sing when I see people actually leaving.

Wither we like it or not The Us economy is in decline and without money the US can not buy military equipment or give aids (bribes) for loyalty anymore either (they are already stopping on doing that) which means the US now has to close down on itself and begin another era of isolation until they (get their **** together) the US will still play a role in international politics but now it wont carry the same weight it did in the previous era.
 
From CSM article I posted

Canada enjoys a triple-A rating, and bond investors currently demand an interest rate of 2.93 percent (as of earlier this week) on its 10-year government bonds. Chile's 10-year bonds are rated lower, at AA, yet have an interest rate of 2.92 percent.

So a slightly lower credit score doesn't necessarily push interest rates dramatically higher. In fact, AA-rated Japan sports a lower yield (1.09 percent) on its 10-year bonds than any nation in the triple-A camp, according to a recent tally by the group Third Way.

One reason for the seeming anomaly: Interest rates are driven by a variety of factors that affect investors, not just the rating from S&P or another firm. The propensity of families in Japan to buy bonds from their government is one example.

This doesn't mean US policymakers shouldn't strive to keep the best rating possible on US debt. Overall, the triple-A countries had average interest rates of 2.98 percent, substantially lower than the double-A average of 3.75 percent. That's real extra money that taxpayers of those lower-score nations have to pay every time their governments go out to borrow.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Back
Top Bottom