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matthews_world
Joined: 15 Feb 2003
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Posted: Fri Aug 05, 2011 11:05 pm Post subject: So what?! U.S. still has an A rating. |
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Should we be worried about a minor drop in the world's largest economies' credit score?
Wall Street felt the effects of the latest budget deal.
China doesn't care. They still want their money. China will still be China.
Chimerica can adjust budgets all they want.
I tried researching the differences between an AAA and AA but couldn't find any. |
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young_clinton
Joined: 09 Sep 2009
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Posted: Sat Aug 06, 2011 1:44 am Post subject: |
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The difference between a Rolls Royce and a Mercedes Benz |
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visitorq
Joined: 11 Jan 2008
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Posted: Sat Aug 06, 2011 2:55 am Post subject: |
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It's a matter of precedent. If it can be lowered once, it can be lowered again. The fact that it was lowered at all means the "faith and credit" of the US government is less than perfect, which affects confidence (even more important than usual since the US dollar is the global reserve currency with no other currency even coming close), and can lead to a vicious cycle. Basically it has now become more expensive for the US to incur future debt (since it is rated as a riskier investment), which means the next time there is any sort of crisis the confidence will drop that much more.
Many people have been predicting this would happen for years (it was inevitable, just as it is probably inevitable the rating will drop more in the future). It's a bad thing, overall, but this is just the beginning. In fact it may even be the beginning of the end for the US dollar... |
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Steelrails

Joined: 12 Mar 2009 Location: Earth, Solar System
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Posted: Sun Aug 07, 2011 2:24 am Post subject: |
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How does someone turn into a C student? Not caring about an A-, then saying a B+ is good enough...and on and on.... |
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silkhighway
Joined: 24 Oct 2010 Location: Canada
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Posted: Sun Aug 07, 2011 9:11 am Post subject: |
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Actually it's 1 of 3 major credit rating agencies and it's AA+ with a further threat of downgrade to AA within 2 years. They also have yet to publicly respond to accusations by the Treasury that they made a 2 trillion dollar error.
I don't know how they assess the risk (I think that's the 2 trillion dollar question right now) but basically AAA is as solid as it gets, and "Junk" is as worthless as it gets with levels in between. In theory, the higher risk you are the more it costs you to borrow money in terms of interest rates,but the US is not a company, it's a government with a monopoly over the control of the defacto world currency which completely changes things. Perhaps more importantly than the actual credit rating is the direction it's moving in, much like the deficit value or GDP. |
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wombatsincombat
Joined: 08 Aug 2011 Location: United States
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Posted: Thu Aug 11, 2011 7:39 am Post subject: |
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Just remember that the same bureau that gave us the AA+ rating after the failed debt talks gave all of those sub prime mortage loans a AAA rating. So, in essence, those loans were a safer investment than US bonds.
Stupid. America will change the rules as they go, they get downgraded to AA+? No problem, we'll just say that there is no real difference between the ratings. |
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Menino80

Joined: 10 Jun 2007 Location: Hodor?
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Posted: Thu Aug 11, 2011 7:55 am Post subject: |
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S&P is a joke, and 10 year t-bill rates have stayed very low.
look what happened to japan with its 200% debt to gdp ratio and AA rating. rates are miniscule, about 1.3% |
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Kuros
Joined: 27 Apr 2004
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Posted: Thu Aug 11, 2011 9:09 am Post subject: |
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America's debt is beyond a full year of GDP.
And we're calling S&P crazy? |
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wombatsincombat
Joined: 08 Aug 2011 Location: United States
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Posted: Thu Aug 11, 2011 9:28 am Post subject: |
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We wouldn't be in debt at all if we werent in wars we didn't belong in and taxed the wealthy at even half an acceptable rate. |
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Menino80

Joined: 10 Jun 2007 Location: Hodor?
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Posted: Thu Aug 11, 2011 2:54 pm Post subject: |
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Kuros wrote: |
America's debt is beyond a full year of GDP.
And we're calling S&P crazy? |
Not crazy, just useless. Again, look at Japan's debt and then look at its 10 year T bill rates. Look at the largest economies by per capita in the world and then look at their debt. See a relationship? S&P is vestigial and superfluous. |
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Sergio Stefanuto
Joined: 14 May 2009 Location: UK
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Posted: Fri Aug 12, 2011 4:20 am Post subject: |
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Menino80 wrote: |
Look at the largest economies by per capita in the world and then look at their debt. See a relationship? |
Below is a list of sovereign states by public debt/gdp (2010). I shall mark (where applicable) the countries that are in the top 10 richest nations in red, 11-20 in blue, 21-30 in black, 31-40 in green and 41-50 in orange.
Japan
Saint Kitts and Nevis
Lebanon
Zimbabwe
Greece
Iceland
Jamaica
Italy
Singapore
Belgium
Ireland
Sudan
Sri Lanka
Canada
France
Portugal
Egypt
Belize
Germany
Nicaragua
Dominica
Israel
United Kingdom
Hungary
Austria
Malta
Netherlands
Spain
C�te d'Ivoire
Jordan
Cyprus
Brazil
Mauritius
Ghana
Albania
Bahrain
United States
Seychelles
Morocco
Bhutan
Guyana
Vietnam
Philippines
Uruguay
India
Croatia
El Salvador
Poland
Malaysia
Kenya
Argentina
Pakistan
Tunisia
Finland
Turkey
Norway
Aruba
Latvia
Colombia
United Arab Emirates
Denmark
Costa Rica
Thailand
Dominican Republic
Mexico
Serbia
Slovakia
Mozambique
Malawi
Sweden
Panama
Bolivia
Bangladesh
Ethiopia
Yemen
Bosnia and Herzegovina
Czech Republic
Ukraine
Switzerland
Lithuania
Montenegro
Slovenia
Cuba
Macedonia
Taiwan
South Africa
Senegal
Romania
Syria
Guatemala
Papua New Guinea
Indonesia
Trinidad and Tobago
Honduras
Gabon
Algeria
New Zealand
Venezuela
Moldova
Zambia
Korea, South
Peru
Tanzania
Ecuador
Paraguay
Botswana
Australia
Uganda
Angola
Namibia
Hong Kong
China
Saudi Arabia
Bulgaria
Iran
Luxembourg
Kazakhstan
Nigeria
Kuwait
Qatar
Cameroon
Russia
Uzbekistan
Gibraltar
Estonia
Chile
Wallis and Futuna
Azerbaijan
Oman
Equatorial Guinea
Libya
Does that look like a relationship to you? |
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Menino80

Joined: 10 Jun 2007 Location: Hodor?
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Posted: Fri Aug 12, 2011 6:27 am Post subject: |
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^
It looks like a poorly presented piece of information. |
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Sergio Stefanuto
Joined: 14 May 2009 Location: UK
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Posted: Fri Aug 12, 2011 6:53 am Post subject: |
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Menino80 wrote: |
^
It looks like a poorly presented piece of information. |
Good grief. If our exchanges were Operation Cast Lead, I'd be the IDF. |
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Menino80

Joined: 10 Jun 2007 Location: Hodor?
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Posted: Fri Aug 12, 2011 2:55 pm Post subject: |
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Sergio Stefanuto wrote: |
Menino80 wrote: |
^
It looks like a poorly presented piece of information. |
Good grief. If our exchanges were Operation Cast Lead, I'd be the IDF. |
If your knowledge of analogies were a ice cream flavor, it would be pralines and dick. |
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sirius black
Joined: 04 Jun 2010
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Posted: Sat Aug 13, 2011 12:34 am Post subject: |
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I'm no economist but I've read that Standards & Poor has been providing credit worthiness on the U.S. since 1917. Since then we've had some very bad economic crisis including the Great Depression, the 73 Oil crisis and stagflation of the '70s nad early '80s, 911 and 4 years ago the country on the brink of economic meltdown. This is worse than all of them? If anyting the near meltdown back in '08 should have given us a lower rating. The fear and possibilities seemed far worse then than this current situation which amounted to nothing more than politicians not agreeing on something. It was in their control to raise or not raise the debt limit. The meltdown 4 years ago was pretty much out of our control.
I find it suspicious they lowered it now. Take 10 points from Slytherin.  |
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