US will not Default but should be Downgraded, result is the same!

[notting]

The US will not default because the will not let it despite the posturing.
However they should be downgraded and that is what will cause global turmoil.
Will the ratings agencies have the courage to pull the trigger to kick off GFC part 2?
That's basically the question.

 

[Knobby22]

To me it looks a lot like posturing for dominance
I'm not sure either side will back down.

 

[Tysonboss1]

The US will not default because the will not let it despite the posturing.
However they should be downgraded and that is what will cause global turmoil.
Will the ratings agencies have the courage to pull the trigger to kick off GFC part 2?
That's basically the question.

So if they were down graded from "AAA" to "AA", what can you see happening.

It's not like there is heaps of other options out their for the big players to work in.

 

[notting]

US Confidence trashed, consumer hibernation, dept harder to maintain, legitimisation of arguments for alternate global benchmark valueing, further downgrades,loss of safe haven anywhere.
Run for your lives.
Something like that!

 

[skc]

So if they were down graded from "AAA" to "AA", what can you see happening.

It's not like there is heaps of other options out their for the big players to work in.

The direct effect of AA vs AAA isn't that much, there'd be a few instos etc that are mandated to hold AAA and can't hold anymore.

But the flow on effect is the scary part. If investors start to drive the rates up on the AA notes, US will be over the tipping point and the deficit will grow larger and larger due to rising interest payments. This can become self-perpetuating... and that will be really bad.

 

[Tanaka]

The US will not default because the will not let it despite the posturing.
However they should be downgraded and that is what will cause global turmoil.
Will the ratings agencies have the courage to pull the trigger to kick off GFC part 2?
That's basically the question.

The rating agencies helped kick off the first GFC, so why not?

http://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis

 

[Tysonboss1]

US Confidence trashed, consumer hibernation, dept harder to maintain, legitimisation of arguments for alternate global benchmark valueing, further downgrades,loss of safe haven anywhere.
Run for your lives.
Something like that!

I seriously doubt it.

 

[wayneL]

I seriously doubt it.

That's what people were saying pre-GFC1.

 

[skc]

That's what people were saying pre-GFC1.

I am seriously surprised by the amount of people who doesn't believe the worst can happen. I would accept it as being unlikely...but the tail risk is so large one has to be prepared for it.

 

[Tysonboss1]

That's what people were saying pre-GFC1.

No,

People were saying and believeing that the world was about to end, everything was going to zero and sold out of their stock holdings at massive discounts to intrinsic value only to realise months later that the world wasn't ending and their rash sales were perhaps unwise.

 

[notting]

Alot of wise people were shorting AAA backed US house bundles and buying gold. Seems to be a bit of a gold theme at present in the big boys portfolios with the US housing still on its knees.

 

[wayneL]

No,

People were saying and believeing that the world was about to end, everything was going to zero and sold out of their stock holdings at massive discounts to intrinsic value only to realise months later that the world wasn't ending and their rash sales were perhaps unwise.

Only a few, and as I recall some were buying at massive discounts to 'intrinsic value' (whatever that is).

Most in the wider community were deer in the headlights.

 

[wayneL]

I am seriously surprised by the amount of people who doesn't believe the worst can happen. I would accept it as being unlikely...but the tail risk is so large one has to be prepared for it.

Yes.

Hope v. Hedge

 

[Tysonboss1]

Alot of wise people were shorting AAA backed US house bundles and buying gold. Seems to be a bit of a gold theme at present in the big boys portfolios with the US housing still on its knees.

I would much rather own US property than gold, but hey thats just me, I prefer to buy things after the bubble has burst, not leading up to the POP.

 

[notting]

Stock markets where oversold once all hell broke loose.
But hell hasn't broken loose on sovereign debt yet and this is the big one.
Looking forward to it.
I agree, US property is a great buy at present especially if you are an Ausi.

 

[skc]

Yes.

Hope v. Hedge

I've put a couple of oppies on last night. Want to share ideas? PM me

 

[Julia]

No,

People were saying and believeing that the world was about to end, everything was going to zero and sold out of their stock holdings at massive discounts to intrinsic value only to realise months later that the world wasn't ending and their rash sales were perhaps unwise.

Or perhaps some people made good use of the opportunity to sell when the descent started, sit on cash for a while, then buy close to double the number of the same shares when the panic was largely over.

 

[notting]

If only it where that easy!

 

[notting]

S&P Downgrades US Debt

OK so now the obvious has happened, has it been sell on the rumour buy the fact?
If US was a company it would carry a rating of C-.
Not just because of it's present ability to pay existing debt, but when you take into account future bills coming it's a C-!
Woops I can't edit Debt in the title.
Sorry, I am mildly retarded.

 

[satanoperca]

Well it is a start.

Markets on edge as S&P downgrades US's coveted AAA credit rating

http://www.theaustralian.com.au/business/markets/markets-on-edge-as-sp-downgrades-uss-coveted-aaa-credit-rating/story-e6frg916-1226109648805

Ciao