US debt, in pictures.
02 August 2011, 09:48 AM
#32
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QE3 almost certainly will happen. Along with reducing the rate currently paid to banks on deposits with the Fed.
God help America, not God bless America.
God help America, not God bless America.
02 August 2011, 10:09 AM
#33
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That I am not questioning - more the comment about the US economy being sold off to the Chinese over the last 20 years 
The Obama slide is interesting - Bush did leave him with an economy that was in a very bad way and dying on it's feet. I am not sure the numbers would be any better if Bush had stayed on!
The Obama slide is interesting - Bush did leave him with an economy that was in a very bad way and dying on it's feet. I am not sure the numbers would be any better if Bush had stayed on!
Maybe Obama had no choice but to so the bail-outs and stimulus but he ultimately signed off on it. Patently it didn't work either.
02 August 2011, 10:14 AM
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What are the Chinese and Arabs going to do with their money instead? Put in under a mattress?
02 August 2011, 10:19 AM
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Of course they affect their value. Otheriwse it wouldn't matter at all would it? Do you understand financial pricing of Government debt?
Alternatives to USTs would be German, French, Austrian, Finnish, Dutch and, heaven forbid, UK Gilts.
Alternatives to USTs would be German, French, Austrian, Finnish, Dutch and, heaven forbid, UK Gilts.
02 August 2011, 10:25 AM
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Looks like they have fallen into the trap of increasing their borrowing and probably "Quantative Easing" now. Bit like us I imagine! Puts it all off to a later date with even greater debts!
Les
Les
02 August 2011, 10:27 AM
#38
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So if the agencies downgraded US T bonds to junk tomorrow would that make it so?
02 August 2011, 10:37 AM
#39
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But they wouldn't do it without an underlying reason. Therefore if they did do it, by their own measurement criteria, US debt would already be "junk", ie with an extremely high risk of default. The ratings agencies are reactive, not pro-active.
02 August 2011, 11:33 AM
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Anyway you are supposing the markets blindly follow agency ratings. I think we both know that the US debt limit is just a technicality and makes no difference to the US government solid ability to raise taxes and pay debt long term.
02 August 2011, 11:40 AM
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You cannot say it won't make a "blind bit of difference". No AAA rating is guaranteed. A country with $14,000,000,000,000 of debt won't necessarily be able to pay you back, it's not circular in any sense whatsoever. Rating agencies will respond to what they see, and right now they don't like what they see.
02 August 2011, 01:41 PM
#43
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but a couple of years ago they were rating junk as triple A - their own measurement criteria must a bit flawed
02 August 2011, 01:47 PM
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Will only be the long term rating, at least that's what has happened elsewhere.
Not sure if they "can't" downgrade the short term rating, but that's A1/P1 and rated differently, i don't think the current concerns put that in jeopardy.
02 August 2011, 01:52 PM
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haha yes i get what you're saying. But, and it's no defence, based on the information they had at the time, those investments could attain the coveted AAA rating. That was massively embarrassing for the rating agencies, no doubt, but hindsight is a wonderful thing. But assigning an accurate rating to an entire country's debt is a much more transparent process (you would hope).
02 August 2011, 02:33 PM
#48
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haha yes i get what you're saying. But, and it's no defence, based on the information they had at the time, those investments could attain the coveted AAA rating. That was massively embarrassing for the rating agencies, no doubt, but hindsight is a wonderful thing. But assigning an accurate rating to an entire country's debt is a much more transparent process (you would hope).
it seems they are the real "big swinging dicks" in the global economy
02 August 2011, 02:41 PM
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Well, they got their names in lights for all the wrong reasons with the whole subprime saga. Generally, they get things right, more or less. But trying to guess the inherent value of a group of structured, leveraged products as they did was a mistake; it's just hugely unfortunate that their unjustifiable (or not quickly-enough revised to put it more accurately) ratings contributed to a worldwide crisis. Of course there are enough conspiracists to tell you they did it for their own ends, but that's another story.
02 August 2011, 08:33 PM
#50
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Well, they got their names in lights for all the wrong reasons with the whole subprime saga. Generally, they get things right, more or less. But trying to guess the inherent value of a group of structured, leveraged products as they did was a mistake; it's just hugely unfortunate that their unjustifiable (or not quickly-enough revised to put it more accurately) ratings contributed to a worldwide crisis. Of course there are enough conspiracists to tell you they did it for their own ends, but that's another story.
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