Thread: US AAA credit rating downgraded

One of the top credit rating agencies, Standard & Poor's, has downgraded the United States' top-notch AAA rating.

S&P cut the long-term US credit rating by one notch to AA+ with a negative outllook, citing concerns about growing budget deficits.

S&P said it was because the deficit reduction plan passed by Congress on Tuesday did not go far enough.

Washington was locked in months of acrimonious partisan bickering over a bill to raise the US debt ceiling.

As rumours swirled earlier about the downgrade, unnamed US officials had told US media that S&P's analysis of the US economic situation was deeply flawed.

Correspondents say a downgrade could further erode global investors' confidence in the US economy, which is already struggling with huge debts and unemployment of 9.1%.

S&P said in its report issued late on Friday: "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics.

"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."

Source: BBC News - US AAA credit rating downgraded

Look out below!!

Originally Posted by bsnub

Look out below!!

What is going to fall ? Stocks or bonds ?

The market is so stupid these days, it wouldn't surprise me to see the stock markets tank and US debt rally even though it was the debt that got downgraded.

I also feel very comfortable with my gold holdings at the moment.

The blame for this lies squarely with the Republican leadership who chose to link the procedural rainsing of the debt ceiling, which has been done 70 times in the past on a straight up and down vote, with the deficit reduction process. Republicans and tea party extremists will pay a heavy price for their tactics in the next election.

So far S&P is the only one to make the downgrade- the other major agencies still have the US at AAA.

How much weight will S&P's rating carry as the minority?

The ratings agencies have zero credibility.

^quite a bit and it is, no doubt, a huge embarrassment to US prestige however the actual effect on interest rates is yet unknown.

Originally Posted by Humbert

The blame for this lies squarely with the Republican leadership who chose to link the procedural rainsing of the debt ceiling, which has been done 70 times in the past on a straight up and down vote, with the deficit reduction process. Republicans and tea party extremists will pay a heavy price for their tactics in the next election.

haha. The Republicans and the tea party know that the creditors of the US are ready to run so that is why they pushed so hard.

Originally Posted by FailSafe

So far S&P is the only one to make the downgrade- the other major agencies still have the US at AAA.

How much weight will S&P's rating carry as the minority?

Considering this was announced a few hours ago, I believe they will follow suit.

Originally Posted by Humbert

^quite a bit and it is, no doubt, a huge embarrassment to US prestige however the actual effect on interest rates is yet unknown.

The market is retarded. My guess is that stocks will sell off Monday and bonds will rally. (rates will fall)

Japan has a AA+ rating. Japan also happens to be one of the US's largest creditors. Imagine that, the creditor has a lower rating then the borrower. That should say enough about these rating agencies.

S&P had Lehman bros and Merill Lynch rated AAA the day they went bankrupt. Bank of America has a 5 star rating right now.

Just a personal summary, only, from one who 'knows nothing.'...
Why listen to any politicians or agencies/polls, etc....?
Just look at the current 'state of affairs'...
USA is clearly fcked...dry fcked even...
Do we have to chisel it in the wall?...
Or do Americans want to play the 'face' game: smiling and pretending nothing is wrong?
Thought that this was just an Asian 'method'...555

funny that these guys have the balls to do it when it was their fault that all of this happened in the first place.

schemers in suits, the lot of em

Originally Posted by socal

I also feel very comfortable with my gold holdings at the moment.

What, the half baht bracelet you bought for your missus at the markets?

I bought a little Thai gold when I got here 3 years ago wish I bought more.

Ahhhhhhh...The Hype...."We gots to have the Hype". What would it all be without the hype, the speculation and the incompetent lemmings following what the media tells them it will all mean.

There will be great opportunities to be had. Wait on it..........Wait on it.............Not yet.............wait............

Reacting to this behavior is exactly what all these assholes want.

Originally Posted by 9999

Originally Posted by socal

I also feel very comfortable with my gold holdings at the moment.

What, the half baht bracelet you bought for your missus at the markets?

I bought a little Thai gold when I got here 3 years ago wish I bought more.

What are you waiting for ? Buy now.

The gold market is at the point right now where it looks like it is going to rally with very few people on board. This is typically how markets work.

No surprise that the ratings agencies are trying to make things worse.

Now, when the finger pointing over how badly the economy is performing starts in the upcoming election year, who is going to benefit?

Exactly. The same people who colluded in the ratings agencies' criminal acts, and the same people that caused the mess in the first place.

American voters have such short memories, they've forgotten who fucked things up, and they'll happily vote them back in.

Originally Posted by bsnub

Standard & Poor's, has downgraded the United States' top-notch AAA rating

Fair enough too. If it weren't the 'too big to fail' (bullshit) USA it would have happened a few years ago.

Originally Posted by bsnub

the effectiveness, stability, and predictability of American policymaking and political institutions have weakened

And ain't that the truth.

I became a stockbroker in January '85. For the US to have lost it's AAA status would have been inconceivable back then, utterly. The whole empirical science of investment is based around a benchmark known as 'the risk free rate of return'. This is commonly defined as the interest being paid on a 90 day US Treasury Bill at that time- and it is absolute bullshit. The USD has been a risky asset for at least a decade now, it's fundamentals steadily deteriorating.

Financially, the USA has gone from the Penthouse to the Shithouse during my working career. Well, they say it ain't such a long way. The cabal of politician and bankers that run your country are unquestionably Criminals, perhaps even Traitors.

Originally Posted by bsnub

S&P cut the long-term US credit rating by one notch to AA+ with a negative outllook,

nothing like making a good headline with little truth

it wasn't a credit downgrade per se, but a negative outlook, which is a long term view rating of a situation and doesn't mean much.

US Bonds credit rating are not rated, they are assumed to be AAA

Originally Posted by socal

S&P had Lehman bros and Merill Lynch rated AAA the day they went bankrupt. .

Well, not true actually.

Morgan Stanley, Merrill, Lehman Ratings Cut by S&P (Update3) - Bloomberg

And....um....Merrill Lynch has at no time ever, in history, gone 'bankrupt' . On the day Lehman filed, the Bank of America acquisition was announced.

Originally Posted by Butterfly

nothing like making a good headline with little truth

it wasn't a credit downgrade per se, but a negative outlook, which is a long term view rating of a situation and doesn't mean much.

Nope. The rating itself was cut. Not just a negative outlook


Teakdoor clearly isn't the place to find out facts on this scenario !

Originally Posted by robuzo

The ratings agencies have zero credibility.

it's funny though that government are giving them so much power when they are ranting everytime a downgrade is issued

Originally Posted by The_Ghost_Of_The_Moog

Nope. The rating itself was cut. Not just a negative outlook


Teakdoor clearly isn't the place to find out facts on this scenario !

and neither the BBC apparently, rating agencies issues 3 different ratings and the US debt are not rated by default, they are assumed to be AAA

the story is about some long term "outlook" which again means fuck all,

I thought you would know that,

http://www.standardandpoors.com/serv...ervalue3=UTF-8

the S&P ratings are quite complex and of different natures, you have the "credit" rating for outstanding debt for possible default, then the outlook which is an economic opinion of the long term performance of a company or country, then the watchlist which is about immediate events

as you can clearly see on the S&P website, USA "sovereign" rating is still regarded as AAA, the rating is unsolicited and was not cut

S&P | Ratings Sovereigns Ratings List | Americas

yet, we have a story about some downgrade, but it's actually the longterm outlook

nothing like a good story to sell,

more here

S&P | Ratings Sovereigns | Americas

Originally Posted by robuzo

The ratings agencies have zero credibility.

These rating agencies are professionally run companies and their product is to evaluate risks to their customers. Not to specific governments.

Originally Posted by Neo

Originally Posted by robuzo

The ratings agencies have zero credibility.

And neither does the Dollar.
It's a game of 'who blinks first' before the inevitable collapse ensues.
S&P are covering their own arse, whether others agree with them or not.
They may be the first to downgrade the Dollar, but they won't be the last.
AA+ is just being kind. Who would have thought it...?

the rating agency have made their rating system far too complex to make them easy to communicate, and coincidently are creating more confusion for the public, investors and journalists to understand what they mean really.

a recent survey of investment professionals by a reputable organization has given surprising results, most "buy-side" professionals who should rely on ratings are no longer believing in the Majors ratings and use their own internal system instead, or use them with a big truck of salt.