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As things stand in Washington right now, we might get to see how seriously we take these rating agencies if they downgrade the U.S. I honestly don't think the credit rating agencies "opinions" will be the major factor of why the market will negatively towards U.S. currency/debt. Granted I agree with you if nothing happens by august 2nd in the very short-term (talking in scale of weeks) there will be repercussions across the world market.
I think in the very short-term the market will be scared of U.S. debt/currency but not because of the rating agencies say to be. It will more driven by political uncertainty than the actual financial situation (bad as it might be) of the U.S. As soon as the political situation is solved soon afterward the fear will leave the markets and things go back to status quo. Even if we are still downgraded at that point. Risk appetite will be back on and we'll keep chugging along.
Also being the Reserve currency has it perks. There is, as I see it, no real alternative at this point to the USD. So I don't think the world is going to allowfor, as you have stated in an earlier post, a "major devaluation” in the currency. At least not yet (perhaps in the future.) After this political mess though, there maybe a serious move to look for a different currency or basket of currencies as the reserve currency. If that happens, then things will get interesting.
And the sad thing is we created this mess here just in the last couple of months. Yes our debt is something that needs to be worked out, but that debt alone is not scaring off any investors. However when Republicans decided to tie the debt ceiling raising (which has ALWAYS been nothing more than a routine thing with not much debate), turning this into a political crisis everyone around the world has become scared of investing here due to this small real threat of default. Thank you, Republicans.
Actually our debt is crushing us because of the artificially low interest rates the Fed has been supporting. If we allowed inflation at 5-7% for 10 years the debt would be manageable
Actually our debt is crushing us because of the artificially low interest rates the Fed has been supporting. If we allowed inflation at 5-7% for 10 years the debt would be manageable
because our money would lose value. thats brilliant.
There is a very interesting article on naked capitalism called "Is Standard & Poor's manipulating US debt ratings to escape liability for the mortgage crisis". I'm on my iPhone and couldn't post the link. It lays out a timeline and discussed the Dodd-Frank bill as it pertains to the credit agencies and political retaliation as a possible reason for the downgrade. Very interesting. Check it out.
Location: Sitting on a bar stool. Guinness in hand.
4,428 posts, read 6,510,291 times
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Quote:
Originally Posted by katfzl
There is a very interesting article on naked capitalism called "Is Standard & Poor's manipulating US debt ratings to escape liability for the mortgage crisis". I'm on my iPhone and couldn't post the link. It lays out a timeline and discussed the Dodd-Frank bill as it pertains to the credit agencies and political retaliation as a possible reason for the downgrade. Very interesting. Check it out.
Just a warning to the folks of CD, This is a blog and definitely has an agenda.
Note: during and at the end of the article it is put forth a petition.
Quote:
Sign our petition to the SEC: Revoke S&P’s authority as a credit ratings agency for their use of ratings as a political weapon and their attempt to avoid responsibility for their role in the financial crisis of 2008.
With that said. I say (I speak only for me) the article/posting was good and I found it to be sourced well. Worth a read through.
(which has ALWAYS been nothing more than a routine thing with not much debate),
thats a problem, the federal government shouldnt be able to hold any debt.
btw, this isnt a crisis. the size of our debt is a crisis, not whether or not we raise the debt limit. everything obama wants to do becomes a big crisis and legislation absolutely must be passed immediately. the stimulus was a crisis and we had to pass it immediately. all the sudden healthcare became a crisis and we needed to pass that load of crap.
the crisis is coming, but its not because we may not raise the debt limit.
thats a problem, the federal government shouldnt be able to hold any debt.
Real question? So how would your Tea Party fund a War?
I guess they could not do like Bush 2 (the liberal, correct?) and the Republican Congress did -- which was to not even put it on the budget and instead roll it straight in the overall debt?
Would the Tea Party (egad) raise Taxes to fund a War?
Real question? So how would your Tea Party fund a War?
Would the Tea Party (egad) raise Taxes to fund a War?
its kind of funny how you pretend as if the only way to fund a war is with debt. there are a variety of ways, i dont see much point in going through them here. but better to tax for a war than to raise debt and put the burden on future taxpayers. debt is a tax.
Wow, you guys are some real deep long term planners and thinkers.
Collectively, you all may be more dangerous to US than most anyone is aware.
Thanks for the honest answer. Seriously.
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