Posted on 05/22/2009 3:38:58 PM PDT by SeekAndFind
It looks like after two months of ignoring the risks that remain for the economy and markets, Wall Street has finally found something else to worry about: the possibility that the United States could lose its AAA credit rating.
Thursday was one of those rare days when stocks, bonds and the dollar all fell. Stocks recovered slightly Friday morning ahead of the Memorial Day weekend, but Treasurys and the greenback were lower again.
The sell-off was partly sparked by Thursday's news that rating agency Standard & Poor's had decided to place the sovereign rating of the United Kingdom on "negative watch."
S&P did not actually downgrade the United Kingdom. Like the United States, it still has an AAA rating, the highest that a country, municipality or corporation can have.
Nonetheless, the move was viewed as a precursor to an eventual downgrade. And investors went one step further to assume that if Britain was being put on notice, then the "colonies" might be next.
White House spokesman Robert Gibbs said Friday that the Obama administration was "not concerned about a change in our credit rating."
But downgrade fears were heightened because the highly respected bond guru Bill Gross, who manages the Pimco Total Return fund, said in published reports that the United States could lose its AAA rating in a few years, if not before then.
If that actually happens, watch out.
For one, it would likely lead to higher interest rates across the board in the United States since a credit downgrade makes it more expensive for the borrower to issue new debt. It's not different than trying to get an attractive mortgage or credit card rate after taking a hit to your FICO score.
(Excerpt) Read more at money.cnn.com ...
Slimebag
Inflating the dollar is defaulting without actually defaulting. People who make this argument are either deliberately obtuse or completely clueless.
I’m sure you could find similar “reassuring” news articles b4 masssive goobermint printing of money and the devaluation of the currency in every country in history that it occurred in.
The dollar broke below 80 on the index today.
And long bonds look like they are going to drop further.
If the dollar doesn’t collapse, it will be a miracle.
And, yes, we as a country will probably default. The only question is when.
May the Good Lord have mercy on His children. Maranatha!
LOL, about the same as CNN being a real news agency I would say.
That will cause substantial domestic inflation.
If we do not cut costs on the Federal Budget across the board we are screwed.
Let Barry and his band a merry incompetents keep printing and devaluing the dollar while spending like prostitutes at a free-for-all party....please, then get back with us, Mr. La Monica. I noticed that you avoided discussing that it is going to take GENERATIONS to fix what the Barry administration has mucked up in less than 150 days in office. Ironic...
LOL! ...domestic deflation to continue (except on oil and the like), and those jobs are not coming back. Internationally, dollar inflation will continue, as due to globalism and the way such things work, the dollar must fall and will fall.
And unless we start producing real wealth (things that we can really use), defaults will be a strong possibility.
Yes
Well, gee... Does anyone believe the Chinese can't read English?
I can't believe how stupid some can be.
Once enough people believe this is going to happen, foreign holders of US debt, US dollars, and other debt denominated in dollars will disappear, and US inflation will skyrocket.
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