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Now the U.S. is AA+ according to S&P


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Uncharted territory, here we go.

 

Not that the future is ever as certain as many think...

 

Well, we had almost the same debt to GDP percentage around 1945, and the U.S. economy flourished decades later. As Buffett would say, long term the U.S. is an innovative country. The U.S. is the breeding ground of innovative, strong and profitable companies like the Google's, Apple's and Amazon's. Can you easy name their counterparts in Greece or Portugal. Don't worry, long term the U.S. will flourish, but we might see some 10-15 years with stalled growth, while public debt and the pompous way of the credit card spending lifestyle has to be reduced.

 

some diagram from wikipedia,....

 

cheers!

 

http://upload.wikimedia.org/wikipedia/commons/thumb/b/b8/US_Federal_Debt_as_Percent_of_GDP_by_President.jpg/800px-US_Federal_Debt_as_Percent_of_GDP_by_President.jpg

 

source: http://en.wikipedia.org/wiki/United_States_public_debt

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I agree with the downgrade....

 

Triple A credits dont discuss willingly defaulting on their debts. Congress is off its rocker (blame the Tea Party perhaps). S&P has probably overreached and their may be blood (probably for S&P inmo), but Congress and the American public need a wake up call and this is a pretty good way to give one.

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I agree with the downgrade....

 

Triple A credits dont discuss willingly defaulting on their debts. Congress is off its rocker (blame the Tea Party perhaps). S&P has probably overreached and their may be blood (probably for S&P inmo), but Congress and the American public need a wake up call and this is a pretty good way to give one.

 

I agree too...S&P is actually doing their job for once.  But I also agree with Buffett that this is almost meaningless in the grand scape of things.  Credit rating agencies work in hindsight and provide no indication whatsoever what will happen in the future. 

 

Shouldn't the U.S. have been downgraded before the whole debt ceiling debate?  Same political parties...same debt load...same GDP...same tax revenues.  Fairfax is still rated A- for Pete's sake! 

 

The U.S. now has the same rating as Canada and France...big deal!  The market may react, or they may not...do we really care?  If they go down, we buy some more.  The main thing is as many have said, politicans need to start working on the problems, and that means creating the right incentives, proper stimulii, equitable opportunity and confidence.  Cheers! 

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OMG!  I didn't realize it was that bad!

 

A little payback for American hockey teams winning the Stanley Cup for the last 17 years!  ;D 

 

Incidentally, on the subject of the United States and Canada, and similiar credit ratings:

 

Canada had to balance their budget and pay down their debt through the nineties and early part of the new millenium...we didn't suffer, univeral healthcare survived, old age security and Canada pension plan checks were paid, teachers didn't commit hari-kari due to increased class sizes, and the world didn't come to an end.  Our economy is far better off for it, as are the generations to come. 

 

One aspect of what helped Canada get through that period was the influx of wealthy, entrepreneurial immigrants from Hong Kong and Taiwan.  With all the worry and discomfort in other parts of the world, especially Europe and Japan, the U.S. may have to consider opening up the flood gates to immigration.  In particular, immigrants of the business-class type visas that would invest capital and start small businesses.  They would need homes, automobiles, food, clothing, education, etc, and increase tax revenues.  Maybe even open up such visas to regions that have greatly suffered economic hardships such as Nevada, Arizona, Florida, Southern California, Michigan, etc.  Food for thought.  Cheers!

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it depends.. as 2 out of the 3 rating agencies still rated it triple-A and with one notch down.. this maybe not big..

 

In the corporate world, when there is a split rating typically one would look to the lower rating.  Unless the lower rating is from Fitch in which case you can just go with the higher one from S&P and/or Moody's.  But as this is uncharted waters, who knows.  I suspect that people will fudge it somehow.  I do wonder what will happen to those who are required to hold AAA debt.  Hopefully their governing instruments were drafted properly and say something to the effect of "AAA debt AND the debt of the US". 

 

 

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Unlike Moodys, S&P's rating criteria has always been based on the probability of the first $1 of default.  How can the US ever default unless the government runs of out of paper for the printing press?  Can't happen.  I don't understand how S&P can downgrade and maintain internal consistency with their rating process. 

 

Now, if S&P were to offer ratings based on the dollars ability to maintain purchasing power, that would make more sense; but on that score the US is a junk credit.

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This is totally perverse.  Totally. 

 

If the US has had its rating lowered then you have to lower everyone elses ratings in tandem.  Canada is totally reliant on the good credit of the US, as is China, the UK, Germany etc.  Ludicrous and meaningless bullshit. 

 

A good wake up call none-the-less. 

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