With an imminent rise in the debt ceiling (most probably before the Tuesday deadline) is the US going to lose the "AAA" rating? If that happens will the stock market crash again like 2007-08?
This is what Triple AAA is worth;
http://videosift.com/video/Dylan-Ratiga … loadcomm=1
More fear mongering that the sky will fall.
http://www.veteranstoday.com/2011/07/30 … -roulette/
Would what happens to the market be a crash or a long overdue correction?
The US might have a AAA rating, but it really doesn't.
My family bought bonds for me 20 years ago, and the stuff almost lost money. The average CPI for our money over the past twenty years has steadfastly remained higher than the interest gained on the bonds, AND now the government is going to tax the interest I did make.
I haven't done the calculations, but we might've lost money trusting the government. They threw about $2000 (in the mid '90s) and 20 years later it accumulated $1200 in interest which translates to a ~2% interest rate. The inflation rate has been routinely higher than that.
... if they would have put the same amount of money in silver and gold, I would have increased the DOLLAR value by 4-8 times.
Oh well, hindsight is a motherf***er, eh?
The US doesn't HAVE a AAA rating (even though it might).
Ha, I knew it! I called it!
It's gonna go lower!
http://www.foxnews.com/opinion/2011/08/ … americans/
According to Credit Suisse there are three possible scenarios:
1. Debt Ceiling Hike Delay => Market Down 15% (Moderate Correction)
2. Default => Market Down 30%+ (Market Crash)
3. Debt Ceiling Extended (Probability 90%) => Market Up 3% (Short Covering)
But I feel a juicy short selling opportunity would be created by the politicians (in collaboration with the market participants). So a 15% correction is very much possible even from here.
The rating system is manipulated. If this isn't something already learned by the collapse of 2008, then politicians certainly did a good job at covering up their own tracks.
S&P 500 pierced through 200 DMA at 1283. More selling on the cards.
There is nothing special about raising hte debt ceiling. Bus did it 7 times during his reign.
The only reason this became newsworthy is because the republicans are doing everything possible to stop teh democrats doing anything.
I wish both parties would pull their heads out, and start making decisions based on what is best for the country ratehr than what is best for themselves and the corporations they represent.
If America doesn't increase tax collections from big evaders and tax the rich fairly it won't be long before the American working class and the middle class will be further decimated.
I am disgusted that a hand full of right wing, mostly religiously fanatic tea party members have destroyed any chance America had of a good recovery.
I am still betting gold up, dollar down.
Indeed, clever accounting means that many of the richest pay very little comparative tax.
I didn't think America had a middle class any more?
Perhaps not, it has been kicked from pillar to post.
Hey Jewels, great to see you again. However, there is no longer a lower class.
Upper class is still upper class.
Middle class is still middle class.
Lower class is now considered poverty stricken class.
By 2020 US will have debt worth $20 trillion... even a 100% progressive taxation shall never be able to compensate for that huge sum of money. So how to fix the problem?
Short term: Print more money... but it will lead to price and asset inflation. It's not an actual fix.
Long term: Just no solution... so the inevitable is US will be broken state-wise like the erstwhile USSR... into 50 different countries.
S&P may not cut the "Triple A" US credit rating immediately, they're under tremendous pressure from the financial fraternity. I'm going to cover my shorts right now in the last hour. Market has ripen for covering the shorts... maybe consider shorting again at S&P 500 1290/1300 level.
The US doesn't have a triple A rating.
The second I found out that my family had Savings bonds for me, I cashed them in and spent the money on silver.
The US's money policy is atrocious. Bernanke has openly admitted that he is NOT too shy to destroy the dollar to bail out companies.
Probrably, moodys and s&p both said 4 trillion at least in cuts was necessary... and we are far from that thanks to the Leftists, and Progressives with no back-bone on the right.
Covered shorts at 1260 level of S&P 500, then shorted again at 1245 level. Right now S&P 500 is at 1190. It seems 1150 is just on the cards! But I'll cover up today, between 1180 and 1190. I've to sacrifice 30-40 points because market is deeply oversold and a strong short covering rally is what everybody is expecting, which hasn't come yet. But that by itself is an indication that market is heading much lower. Happy shorting guys!
Finally S&P downgraded US long term credit rating by 1 notch... to AA+ from AAA. US held the agency’s top triple-A rating since 1941. This will result in further weakness in stock markets worldwide... at least in the short term (rest of August).
Now a QE3 can only save the stock markets. If US stocks fall 30%+ from the recent top... only one man can save them, Mr. Ben Bernanke.
A QE3 CAN NOT SAVE THE MARKETS!!!
Wake UP!! QE1 AND QE2 AND THE BAILOUTS AND THE 3-YEAR LONG STINT OF 0% INTEREST RATES HAS DONE NOTHING TO HELP THE ECONOMY
WAKE UP!! KRUGMAN IS WRONG, BERNANKE IS WRONG, KEYNES HAS BEEN WRONG!!!
We need to STOP inflating, STOP spending.
ARRRGHGHHHHH, I Can't even type straight - How can you even say that we need a QE3!?!?!!
Everyone makes fun of the Austrian Economists for "not looking at evidence", but EVERYTHING THE MAIN-STREAM ECONOMISTS HAVE DONE HAS DONE NOTHING!!!
Hey Evan G Rogers... please calm down, saving the stock market doesn't necessarily mean saving the economy. Stock markets no longer properly reflect the true state of the underlying economy... especially the US economy.
How to Save the US Economy
You're right... by encouraging saving, both corporate and household. Keynesian "Effective Demand" theory doesn't contradict encouraging saving. In fact saving is a part of Keynesian "Effective Demand".
"Effective Demand" is the following equilibrium:
C+I+G = C+S+T
S implies saving.
John Maynard Keynes is more relevant today with rising unemployment than ever before!
http://www.economicsconcepts.com/keynes … oyment.htm
I =/= S
Investment isn't the same thing as saving, especially when money is being created out of thin air.
Keynes is wrong. The Stagflation of the 70s-80s proved him wrong once, the failure of QE1&2 proved him wrong again, our horrendous unpayable debts proved him wrong again...
..I could keep going, but he's just so wrong it will take me hours to discuss it all.
Spending is NOT the way to fix "the economy".
Keynes was never convinced of the classical version that interest elasticity can equate savings and investment. According to him, it is the income and not the rate of interest which is the equilibrium, force between saving and investment.
Government deficit spending is a central point of controversy in economics, with prominent economists holding differing views. The mainstream economics position is that deficit spending is desirable and necessary as part of countercyclical fiscal policy, but that there should not be a structural deficit: in an economic slump, government should run deficits, to compensate for the shortfall in aggregate demand, but should run corresponding surpluses in boom times so that there is no net deficit over an economic cycle – a cyclical deficit only. This is derived from Keynesian economics.
Did the US policy makers follow Keynesianism in the last three decades? The answer is a big fat NO. In the boom, a superabundance of mispriced debt led countless people down innumerable blind investment alleys... E-Z credit financed bubbles in real estate, commodities, credit default swaps, mortgage-backed securities and a myriad of other assets. It punished saving and encouraged speculation.
Advocates of sound finance (fiscal conservatism) reject Keynesianism and, in the strongest form, argue that government should always run a balanced budget (and a surplus to pay down any outstanding debt), and that deficit spending is always bad policy. Some of the policy makers are talking about a balanced budget today... what were they doing when Fed was printing money even in boom times? You never adopted proper Keynesianism and now you're trying to introduce fiscal conservatism? And that too at a time when the ship is sinking? How would you pay off your debts right now if you don't print money?
The usual argument against deficit spending, dating to Adam Smith, is that households should not run deficits – one should have money before one spends it, from prudence – and that what is correct for a household is correct for a nation and its government. A further argument is that debts must be repaid, and thus it is burdening future generations to run deficits today, for little or no gain. Did the policy makers ever bother to pay off the debts? Instead they did indulge to create the "Credit Default Swaps" to take advantage of an indebted US and make more money out of it.
So the policy makers did neither follow proper Keynesianism nor proper classical or neoclassical-inclined economics. John Maynard Keynes paved the way to the US to come out off the great depression of the 30's as an economic Super Power. One shouldn't forget that.
Mr. Ben Bernanke hinted today at the Jackson Hole meeting of Fed that another round of "Quantitative Easing" is not ruled out. So QE3 is expected to materialize later this year or early next year.
Yes we have to enrich all those wall street campaign contributors, after all Obama needs a billion dollars for his re-election bid!
At some point all this money printing is going to lead to runaway inflation. You're seeing it in gold right now and there's been plenty of global inflation in food and energy leading to revolutions like in Egypt.
Well, Obama, the Left, and Progressive Right, got what they wanted.
Of course they would have been happier with a CCC.
no...the Tea Party got what it wanted...
And when it doesn't work the way they said it should they will blame Obama for the next 20 years.
The US has a HORRIBLE credit rating!!
We print money out of thin air and pass it off like it's gold!!
This rating is going to plummet!! hard!
The only reason why it didn't plummet harder is because the S&P knows damned well that the government wouldn't let it survive if it lowered it to where it should be.
The dollar is worthless.
Well, all is not lost. S&P is only one of three bond rating houses. The other two, Moody's and Fitch haven't reduced US bond ratings.
"Spending is NOT the way to fix "the economy"." I am not going to spend any money in your business. Good luck.
US stock market indices will start trading in the National Stock Exchange (NSE) of India from tomorrow.
http://www.moneycontrol.com/news/market … tml#toptag
So I don't have to depend on my friends living in US anymore to trade in S&P 500 futures and options.
by Thomas Byers 9 years ago
No we didn't fall off the cliff but the Debt Ceiling Crisis is still looming out there and will have to be dealt with sooner rather than later. I'll bet you this is waking up many politicians including the President in the middle of the night. What do you think?Who do you blame for the Debt Ceiling...
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by mio cid 10 years ago
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