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So what?! U.S. still has an A rating.
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matthews_world



Joined: 15 Feb 2003

PostPosted: Fri Aug 05, 2011 11:05 pm    Post subject: So what?! U.S. still has an A rating. Reply with quote

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

PostPosted: Sat Aug 06, 2011 1:44 am    Post subject: Reply with quote

The difference between a Rolls Royce and a Mercedes Benz
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visitorq



Joined: 11 Jan 2008

PostPosted: Sat Aug 06, 2011 2:55 am    Post subject: Reply with quote

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

PostPosted: Sun Aug 07, 2011 2:24 am    Post subject: Reply with quote

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

PostPosted: Sun Aug 07, 2011 9:11 am    Post subject: Reply with quote

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

PostPosted: Thu Aug 11, 2011 7:39 am    Post subject: Reply with quote

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?

PostPosted: Thu Aug 11, 2011 7:55 am    Post subject: Reply with quote

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

PostPosted: Thu Aug 11, 2011 9:09 am    Post subject: Reply with quote

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

PostPosted: Thu Aug 11, 2011 9:28 am    Post subject: Reply with quote

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?

PostPosted: Thu Aug 11, 2011 2:54 pm    Post subject: Reply with quote

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

PostPosted: Fri Aug 12, 2011 4:20 am    Post subject: Reply with quote

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?

PostPosted: Fri Aug 12, 2011 6:27 am    Post subject: Reply with quote

^

It looks like a poorly presented piece of information.
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Sergio Stefanuto



Joined: 14 May 2009
Location: UK

PostPosted: Fri Aug 12, 2011 6:53 am    Post subject: Reply with quote

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?

PostPosted: Fri Aug 12, 2011 2:55 pm    Post subject: Reply with quote

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

PostPosted: Sat Aug 13, 2011 12:34 am    Post subject: Reply with quote

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. Wink
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