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Author Topic: USA Credit Rating downgraded from AAA to AA+ by S&P. Who are S&P?  (Read 4048 times)
Possum
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August 06, 2011, 11:38:45 AM
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Hi

I see that the US Dollar just got downgraded by the S&P. Is S&P these people

http://www.standardandpoors.com/home/en/ap

Who are they and why are they so special?

Thank you
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The_JMiner
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August 06, 2011, 11:42:17 AM
 #2

Hi

I see that the US Dollar just got downgraded by the S&P. Is S&P these people

http://www.standardandpoors.com/home/en/ap

Who are they and why are they so special?

Thank you

Just a rating agency they rate what are the chances of a  company or country to default (or payback ) its debt. I heard it is the last place you want to work in wallstreet.

RogerR
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August 06, 2011, 01:29:28 PM
 #3

Hi

I see that the US Dollar just got downgraded by the S&P. Is S&P these people

http://www.standardandpoors.com/home/en/ap

Who are they and why are they so special?

Thank you

Just a rating agency they rate what are the chances of a  company or country to default (or payback ) its debt. I heard it is the last place you want to work in wallstreet.

Not just a rating agency - along with Moody's it is THE rating agency. Been around for more than 100 years, backed by McGrawhill Publishing which is a Fortune 500 company.

They got burnt during the Subprime crisis for their prolongued AAA - mortgage ratings (it was asset backed after all) and have been very close to the book in the past few years when it came to applying their standards. And since the Congress budget farce has shown that a US default is apparently not completely off the table as a viable political instrument, a downgrade simply had to happen until the finances are in order.

Personally, I would also insert devaluation tactics into any credit rating decision to protect the PPP of investors principle: loose one grade for every 2% you choose to devaluate your money per year. If such a strategy was to be applied, the US would have never gotten a AAA rating to begin with.

Btw - Greece was practically already sent into default (CC rating - that's like, almost 20 notches further down the rankings) by them - even though they are officially backed by EU money (EFSF fund) and only contribute like 2% to the EU yearly budget. Greece is peanuts compared to the equally insolvent California or Illinois.

edit: typo fixed
The_JMiner
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August 06, 2011, 04:16:41 PM
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They got burnt during the Subprime crisis for their prolongued AAA - mortgage ratings (it was asset backed after all) and have been very close to the book in the past few years when it came to applying their standards.

That is why I do not give them credit. After all the bullshit with the mortgage ratings it is going to take a lot for them to get back some respect. IMO

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August 06, 2011, 04:25:41 PM
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That is why I do not give them credit. After all the bullshit with the mortgage ratings it is going to take a lot for them to get back some respect. IMO
What you think is irrelevant, though. It most likely will have an impact on the economy of the US and the world, because these ratings are important to a lot of the large funds.
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August 06, 2011, 09:56:57 PM
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What are these Funds you talk about

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even though they are officially backed by EU money (ESFS fund)
RogerR
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August 06, 2011, 10:02:11 PM
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What are these Funds you talk about

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even though they are officially backed by EU money (ESFS fund)


Sorry, I meant EFSF (European Financial Stability Facility) - http://en.wikipedia.org/wiki/European_Financial_Stability_Facility.

Long story short, it is basically the de-facto installment of a transfer union.
CurbsideProphet
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August 06, 2011, 10:22:16 PM
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S&P and Moodys rate debt based on their probability of default.  They then assign it a grade from AAA to D. 


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August 06, 2011, 11:40:45 PM
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Going by this the USA must be a C or maybe even a D because I don't know how that dept can be paid back


P.S..  Pre President Johnson America was a great country that has a real direction.. So I'm not anti USA..  
The_JMiner
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August 07, 2011, 01:59:44 AM
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Going by this the USA must be a C or maybe even a D because I don't know how that dept can be paid back


P.S..  Pre President Johnson America was a great country that has a real direction.. So I'm not anti USA..  

We can pay it back because we can print more money (only because we are the reserve currency of the world) and our GDP (for now) is strong enough to pay it back.

World stops using USD as reserve currency = were fucked

GPD goes down (aka: recession) = we take longer to pay it back.

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August 07, 2011, 05:07:12 AM
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Going by this the USA must be a C or maybe even a D because I don't know how that dept can be paid back


P.S..  Pre President Johnson America was a great country that has a real direction.. So I'm not anti USA..  

We can pay it back because we can print more money (only because we are the reserve currency of the world) and our GDP (for now) is strong enough to pay it back.

World stops using USD as reserve currency = were fucked

GPD goes down (aka: recession) = we take longer to pay it back.
The world talks big, but if the dollar tanks so do they. Who do you think is buying up all our debt? Theres a reason why BTC is trading at $7 right now and not $50...

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August 07, 2011, 05:27:45 AM
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BTC economy is an amoeba on a flea on a dog when it comes to the world economy. Ratings downgrade has nothing to do with BTC prices today or yesterday.

Ratings downgrade prob wont do much, the stock market is so shaky that treasuries still look hella safe in comparison. An Italian default however, would make the global economics shell game get a lot more interesting.
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August 07, 2011, 01:33:47 PM
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BTC economy is an amoeba on a flea on a dog when it comes to the world economy

Yes BTC may be this. But it is real and it does work. It attracted me to the concept of money and what money really is. Even as an educational tool BTC is priceless. My advice is buy Silver. But have a few Bitcoins as well. And be ready to buy more of Both..
chungenhung
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August 11, 2011, 07:50:14 PM
 #14

THE US credit rating should either be AAA or D.
AAA because the US owes its creditors in USD only, which it can print at will.
D because if the US don't print more money, it will for sure bankrupt.

Trading MtGox USD for Dwolla/ACH deposit/Chase cash deposit
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August 12, 2011, 03:25:25 PM
 #15

BTC economy is an amoeba on a flea on a dog when it comes to the world economy. Ratings downgrade has nothing to do with BTC prices today or yesterday.

Ratings downgrade prob wont do much, the stock market is so shaky that treasuries still look hella safe in comparison. An Italian default however, would make the global economics shell game get a lot more interesting.

Amoebas don't live on fleas

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niemivh
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August 24, 2011, 04:44:34 AM
 #16

Hi

I see that the US Dollar just got downgraded by the S&P. Is S&P these people

http://www.standardandpoors.com/home/en/ap

Who are they and why are they so special?

Thank you

Worse part is that a bunch of Tea Party morons are cheering this on.  They hate banks, hate taxes and hate the debt yet cheer a credit downgrade which (in theory) should have resulted in higher interest rates being paid on Treasury Bonds.  Meaning that more money would be paid to the holders of these debt instruments... which is mostly banks.


I'll keep my politics out of your economics if you keep your economics out of my politics.

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kjj
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August 25, 2011, 04:54:10 PM
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Worse part is that a bunch of Tea Party morons are cheering this on.  They hate banks, hate taxes and hate the debt yet cheer a credit downgrade which (in theory) should have resulted in higher interest rates being paid on Treasury Bonds.  Meaning that more money would be paid to the holders of these debt instruments... which is mostly banks.

By your logic, people should blame hangovers for making them drunk the night before.

Bonds don't have variable coupon rate (I'm ignoring TIPS here).  All that is needed to avoid paying more interest to the banks is to stop issuing new bonds.

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October 16, 2011, 10:21:59 PM
 #18

Hi,


Hi

I see that the US Dollar just got downgraded by the S&P. Is S&P these people

http://www.standardandpoors.com/home/en/ap

Who are they and why are they so special?

Thank you

They a bunch of idiots that actually gave AAA ratings to trash sub-prime derivatives.
Also they are the idiots that gave AAA ratings to Lehman Brothers the Day Before they went bust !

So for all due purposes and if someone actually mistrust their ratings according to their Vast past rating they usually rate Very High all Asset groups under evaluation ...
They recently  downgraded the USA one Level, I strongly believe that According to their past ratings ... that is a very very bad thing ... they should have downgraded at least Five or Six levels ....

Regards.
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