Thread in which the world laughs at America

[MichaeltheGreat]

Not every republican is Rush Limbaugh. Not every democrat is Pelosi. Not every black is Fred Sanford. Not every Texan rides a horse to work.
Get over the generalities.

Some of you drive tractors so you can flatten the armadillos.

[C0ckney]

[notyoueither]

According to ABC News, Standard & Poor is about to downgrade US debt from AAA, where it had been forever.

This appears to be a proper downgrade. The debt deal was very modest -- the congress and president are kicking the can down the road until after the election, unfortunately.

I'd read that would be not good as some very large investors can only do business with AAA entities, and the country's credit rating affects its banks and financial insitutions. Am I recollecting that correctly?

[KrazyHorse]

I'd read that would be not good as some very large investors can only do business with AAA entities, and the country's credit rating affects its banks and financial insitutions. Am I recollecting that correctly?

It appears that the morons at S&P believe that the 55bp credit spread on US Treasuries deserves a downgrade, yet Germany's 70bp spread, the UK's 75bp spread, Austria's 90bp spread and France's 140bp spread places them all firmly in the AAA category.



The best part of the ratings downgrade is going to be the collateral movements required. Some (don't know how many as a percentage) credit support annexes require AAA-rated securities placed as collateral on OTC transactions, or may take a significant haircut for lower-rated securities. Guess which AAA-rated security is by far the most common collateral? And the repo market will go haywire too.

[Kuciwalker]

I'm surprised they aren't having y'all furiously construct contingency plans, etc.

[KrazyHorse]

I am not a trader.

[Tupac Shakur]

The best part of the ratings downgrade is going to be the collateral movements required. Some (don't know how many as a percentage) credit support annexes require AAA-rated securities placed as collateral on OTC transactions, or may take a significant haircut for lower-rated securities. Guess which AAA-rated security is by far the most common collateral? And the repo market will go haywire too.

I read somewhere that all hell won't break loose so long as S&P is the only rating agency that downgrades US debt because you only need two of the three rating agencies to rate US debt AAA for it to count as AAA for transaction purposes. Not sure how accurate that is, though.

You mean Manassas. We names battles after the towns we defended. The Yankees named 'em after the terrain features they tried to hide behind afore they just up and ran.

Scoreboard.

[KrazyHorse]

I read somewhere that all hell won't break loose so long as S&P is the only rating agency that downgrades US debt because you only need two of the three rating agencies to rate US debt AAA for it to count as AAA for transaction purposes. Not sure how accurate that is, though.

It depends on the CSA. Not all of them are that forgiving.

[Tupac Shakur]

****.

Also, **** the CSA.

[KrazyHorse]

CSAs and secured lending are the two places where even trading superpowers still depend on ratings (other than to satisfy regulatory requirements).

[KrazyHorse]

Also, **** the CSA.

I assume this is a dig at the South?

[Tupac Shakur]

You assume correctly.

[KrazyHorse]

Officially downgraded.

http://www.cnbc.com/id/44039103

[KrazyHorse]

33ish hours till Asia opens

[DanS]

It appears that the morons at S&P believe that the 55bp credit spread on US Treasuries deserves a downgrade, yet Germany's 70bp spread, the UK's 75bp spread, Austria's 90bp spread and France's 140bp spread places them all firmly in the AAA category.

It's their job to make these calls, no matter the market. We're at 100% of GDP on gross debt and our political system just kicked the problem down the road. I have a hard time criticizing S&P.