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“It doesn’t really matter that much” because it’s the market, not rating agencies, that determines borrowing costs, Dimon told CNBC’s Leslie Picker.
Still, it’s “ridiculous” that other countries have higher credit ratings than the U.S. when they depend on the stability created by the U.S. and its military, Dimon added.
“To have them be triple-A and not America is kind of ridiculous,” Dimon said. “It’s still the most prosperous nation on the planet, it’s the most secure nation on the planet.”
I do note, however, that the article's author (Claire A. Hill) lacks the mathematical sophistication to opine on some of the issues above. She has a BA and MA in Philosophy from the University of Chicago - so she clearly is intelligent. But she does not not have a degree in Mathematics, Economics, Mathematical Economics, Physics or the like. Realistically, the only way to evaluate quantitative risk management & the Quants is actually to be a Quant.
Point noted.
I work in a field that uses differential equations (and integration) embedded within computer programs. We are not mathematicians, but most of us studied calculus, differential equations, and statistics along the way.
Whenever I use an analytical or numerical solution buried within a fancy graphical user interface, I read up on the published research papers that are the basis for the computer algorithms. Not everyone does, unfortunately. It takes effort to go through the assumptions and shortcuts used to get a workable solution that can attain results to within, say, 5% error.
Methinks that too many investors just take the advice of so-called "experts" rather than dig into the details themselves.
The Real question is 'Who has the Highest Bond Ratings?'
???
Good question. We'll use the Fitch ratings since that is what is being discussed in this thread.
Here are the countries and their current Fitch ratings:
Australia AAA
Canada AA+
Denmark AAA
Germany AAA
Luxembourg AAA
Netherlands AAA
Switzerland AAA
Norway AAA
Sweden AAA
European Union AAA
Singapore AAA
USA AA+
Austria AA+
Finland AA+
New Zealand AA+
France AA-
Hong Kong AA-
Taiwan AA
United Arab Emirates AA-
Belgium AA-
Macau AA
United Kingdom AA-
Qatar AA-
South Korea AA-
So I count 10 countries with AAA ratings, higher than that of the USA's brand new rating. One can look at the list and wonder what portion of the rating is due to geopolitical risk as for example, Hong Kong, Taiwan, and the riots in France.
General government deficit (GGD) was 3.7% in 2022 and it is expected to rise to 6.3% in 2023. Fitch forecasts the GGD to rise to 6.6% in 2024 and 6.9% in 2025. Not the worst it has ever been, but problematic none the same.
Makes me wonder what will happen the next two years with debt ceiling put on hold. No matter how vehemently we disagree with each other in the U.S., I doubt most creditors would care if our debt load weren't so high. I think 2025 is going to tell the tale whether we get downgraded again. We have several cities I'm surprised with their problems can even get bonds sold.
The US treasuries collapse will be our single largest economic reckoning since inception. When the treasury market implodes then all of our credit markets will collapse as will assets value tank in industries that are tied to debt funding.
Good question. We'll use the Fitch ratings since that is what is being discussed in this thread.
Here are the countries and their current Fitch ratings:
Australia AAA
Canada AA+
Denmark AAA
Germany AAA
Luxembourg AAA
Netherlands AAA
Switzerland AAA
Norway AAA
Sweden AAA
European Union AAA
Singapore AAA
USA AA+
Austria AA+
Finland AA+
New Zealand AA+ France AA-
Hong Kong AA-
Taiwan AA
United Arab Emirates AA-
Belgium AA-
Macau AA
United Kingdom AA-
Qatar AA-
South Korea AA-
So I count 10 countries with AAA ratings, higher than that of the USA's brand new rating. One can look at the list and wonder what portion of the rating is due to geopolitical risk as for example, Hong Kong, Taiwan, and the riots in France.
France was downgraded to AA - by Fitch not due to recent riots per se, but rather for pretty much same reasons as USA; huge deficits along with spending problems coupled with what Fitch perceives as political gridlock. Recent riots by "Yellows" and other unions worry Fitch that M. Macron will not be able to carry out various fiscal reforms badly needed in France.
France or rather the French long have enjoyed vast and extensive social programs, pensions, work rules, etc... that the country simply can no longer afford. France indeed is famous for deficit spending. Back when there was the Franc the country could use it's currency to manipulate things, since joining the Euro that is no longer possible.
In fact up and down that line posted above at least for European nations and now USA Fitch downgraded places to AA - for similar sort of reasons.
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