U.S. Credit Rating Downgraded.
- Thread starter Yui108
- Start date
Doubtful. What currency would you replace the dollar with?
Trev
Prince
Gold.
Initially gold, which many creditor nations are already increasing their holdings of, in the longer term if America continues to run deficits and have a weak economy another currency will come to the fore.
Verbose
Deity
Seems the Chinese are proposing some form of currency basket. Dollar is probably supposed to be in there, only reduced in relative significance by the company, which would be the point of the exercise.
Verbose
Deity
More like it derives from the trust put into their verdicts by every Tom, Dick and Harry of the global economy. They provide a very useful service in high demand. Government controlled rating agencies are around - they just don't seem to garner similar levels of trust...
And we welcome the US to the reality US EU-people have been living with for a while. The controversy of the rating agencies stems from them being totally un-appointed, and because how they actually calculate ratings is a trade secret. We, the various nations, know they will have things to say about us which can impact our national finances significantly. There's just no transparency about the process of how and why they arrive at their conclusions.
Loppan Torkel
Deity
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One thing that is somewhat amusing in all this is how China is squirming. All the talk about not meddling in other nations state affairs, they are waiving their fingers pretty wide now. I don't blame them, but I still enjoy it a bit.
So, any of you were wise enough to invest in gold while it was low, or are you stockpiling food and ammunition?
Verbose
Deity
I think I sense at least a bit of Chinese smugness about being able to hector the US about something it's otherwise always been supposed to rock at like they feel the US has been talking down to China about a bunch of stuff over the years.
Gary Childress
Student for and of life
I've got an idea of how to solve this crisis.
1st we reduce taxes and government revenue.
2nd we increase government spending.
I say we give it a try and see if it works.
1st we reduce taxes and government revenue.
2nd we increase government spending.
I say we give it a try and see if it works.
With what, then? The Euro has its own problems currently, and from what I've read about the Renminbi, their monetary system isn't ready to carry that weight for at least a decade.
You're only a wise gold investor if you know when to sell it.
Mise
isle of lucy
First of all, the markets don't really pay attention to the ratings. By which I mean, the markets have already priced in what they believe the creditworthiness of the US is into US government bonds. The same thing happened to the UK, only in reverse: we kept our AAA rating, but we were paying AA prices for government debt.
And unless the other agencies follow suit (which they won't), this won't have a huge impact on banking.
It will, however, have a huge impact politically, and on consumer and business confidence. That's pretty damaging.
And unless the other agencies follow suit (which they won't), this won't have a huge impact on banking.
It will, however, have a huge impact politically, and on consumer and business confidence. That's pretty damaging.
Quackers
The Frog
We will keep it as long as we keep growing.
Mise
isle of lucy
That doesn't make sense. We're still 4% away from our peak output before the recession, while the US, Germany, France, etc etc are all back above their peak. We've fallen massively behind the rest of the world in growth, and many independent analyses have concluded that Osborne will fall short of his deficit and debt reduction plan too.
So we get the worst of all worlds: high debt, ongoing deficits, and low GDP. As I said, even if we don't formally lose our AAA rating, we'll still be paying more than the US on our bonds for some time yet.
So we get the worst of all worlds: high debt, ongoing deficits, and low GDP. As I said, even if we don't formally lose our AAA rating, we'll still be paying more than the US on our bonds for some time yet.
Shouldn't've given up Canada and Australia.
RedRalph
Deity
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Oh, I'm not saying it's imminent, but it's starting to look like a real prospect.
Don't worry. The UK AAA will be lost as soon as it becomes apparent that Osborne's plans won't work. Given that the UK (along with the rest of us) is heading for a double dip that realisation may come fairly soon. I expect only very few AAA countries to retain their rating over the next few years. Think for example about the insane amount of guarantees that Eurozone AAA countries are asked to put up to save the currency...
The next reserve currency will consist of a basket of currencies, not a single currency and not gold.
Ayatollah So
the spoof'll set you free
Sadly, if other credit rating agencies follow suit, some major T-bill investors will be required to sell, which could drive interest rates up somewhat.
That's poetic injustice for you, given that the decision to downgrade was a political one in the first place. There are plenty of riskier AAA-rated investments. Heck, I wonder if you can still find AAA-rated CDOs.
GoodGame
Red, White, & Blue, baby!
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That's not what I meant, but that's another issue to face if you break into an industry that already is dominated by 3 or 4 companies. What I meant was that Walmart was once just one little store in the 1960s. Just saying that's why you might not just want to gripe about the Moodys/S&Ps unless you have a strong competing product yourself.
GoodGame
Red, White, & Blue, baby!
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It'll probably be a de facto replacement when it comes, going to whichever country has the strongest fiscal policy.
IMF might try to get in on it (old news): http://money.cnn.com/2011/02/10/markets/dollar/index.htm
"SDRs" as meta-currency, though really that sounds like "IMF Dollars".
I'd go with whomever manages to eclipse the US economically and in international politics, if ever, will probably get to decide the next reserve currency----maybe Euro, maybe Yuan, maybe Yen.
