[Bill Hicks]

If the credit agencies were at all honest, the U.S. would be rated ZZZ.

[Daniel_Plainview]

If the credit agencies were at all honest, the U.S. would be rated ZZZ.

Actually, many non-US credit agencies appear to be fairly honest; consider, for example, when the Chinese agency, Dagong, lowered the US credit ratings from A+ to A a few days ago.

But you're entirely correct that US rating agencies are corrupt and incompetent. Intrinsically, the US is nowhere near an AA+ rating.

[mattduke]

AA+? Yawn. It's JUNK.

[Serial_Worrier]

I'd say the average American credit rating is FFF.

[eXpat]

Got Gold?

Aug 06, 2011 (DailyFX via COMTEX) -- Through it doesn't come as much of a surprise to the skeptics of the United States' feeble attempt at reining in the country's ballooning deficit, Standard & Poor's announcement that it was downgrading the country's top credit rating will nonetheless catch the market off kilter. With the official announcement coming in the evening hours Friday; the market now has the whole weekend ahead of it to mull over the impact this unprecedented shift has on the market. The considerations are multivariate and confusion will likely be the most consistent result. However, there are general expectations on which to establish expectations.
...
The first consideration is that the greatest potential benefactor from this shift will be gold. The dollar's gradual depreciation has been a key selling point for the greenback; and this move will certainly further undermine the dollar's value as a safe haven as its anchor in the world of finance (Treasuries) has come unmoored. Scrambling for an alternative that meets the standard that the asset is almost as good as cash while avoiding the financial crisis developing in Europe and Asia leaves few other options besides the precious metal. Of course, if risk aversion kicks into high gear, the need for liquidity to cover margin calls on other trades could very well draw capital out of gold. Such uncertainty exists everywhere.
...
From the FX market, the risk appetite and funding considerations behind the dollar will be pivotal. Measuring the currency's health against its various counterparts sets us up with different categories. Those currencies that stand to benefit the most from the loss of safe haven appeal are the Swiss franc and Japanese yen. Both countries have attempted recently to devalue their currency; but active intervention against a wholesale dollar unwinding is destined to fail. As such, we'll be watching to see how quickly USDCHF and USDJPY can drop below 0.75 and 76.00 respectively - and how far they could run beyond it. Watch for emergency meetings over the weekend and stated plans for coordinated action in an effort to stablize the market's and these pairs specifically.
...
Going down the list, we have the core group which includes EURUSD and GBPUSD. If the market abondons the dollar, the euro will hold the appeal of being the second most liquid currency in the world; but its funding troubles will complicate this scenario. For the cable, the sterling has no immediate fundamental issues to deal with; so it would be easier for GBPUSD to run and keep running.

http://news.tradingcharts.com/futures/5/6/162788265.html

[PrestonSturges]

Which is not to say that people are dumping the dollar, no, people are fleeing to the dollar!

TheAutomaticEarth called this months ago!

[Serial_Worrier]

Which is not to say that people are dumping the dollar, no, people are fleeing to the dollar!

TheAutomaticEarth called this months ago!

Still there's no substitute for cold, hard cash.

[Keith_McClary]

I think some funds like pensions and escrow accounts have legal requirements to invest in AAA.

[timmac]

What country still has AAA ratings, or is there any..

[peripato]

Which is not to say that people are dumping the dollar, no, people are fleeing to the dollar!

TheAutomaticEarth called this months ago!

Indeed, but nevertheless am reminded of this analogy...


The US dollar of course making up "the stern" of the world financial system, as constituted after 1944...

[EnergyUnlimited]

What country still has AAA ratings, or is there any..

Germany for sure.

[Keith_McClary]

S&P Offices Demolished by Cruise Missile

Funny, S&P made a $2T arithmetic error, but after consideration, decided to downgrade anyway:

The $2 trillion error, urgent meetings & then a downgrade

Heck, what's a couple trillion more or less?

[Sys1]

France too! I will report you riots or revolution as soon as we'll loose our AAA (except in the case I or the Internet die during the coming events).

[careinke]

I suspect some very serious pressures are being applied to the S&P. My bold prediction is they change their rating back to AAA before the Chinese Markets open.

[americandream]

I suspect some very serious pressures are being applied to the S&P. My bold prediction is they change their rating back to AAA before the Chinese Markets open.

Downgrading the heart of capitalism is of no great moment as the need for a secure vault is waning with the conquest of much of the globe. Capital can go hither and thither....it has no one to fear as we find with the Libyan and Syrian situation where relatively minor irritants are being dealt with, with impunity. I suspect this downgrading will merely cower the working American man even further and set the pace for swingeing wage cuts all over the West.

I don't mean to suggest that they are sitting somewhere in a dark room fiendishly planning these outcomes. However, these necessarily follow each stage in capital's development as the emphasis now shifts back to wealth being in the hands of a small group as oppsoed to the brief foray into populist capitalism during the heyday of home ownership.

[peripato]

I suspect some very serious pressures are being applied to the S&P. My bold prediction is they change their rating back to AAA before the Chinese Markets open.

Yeah, but the chooks are out of the henhouse now, as this downgrade came from within the U.S. establishment. Unlike that of the Chinese Agency's recently.

[SeaGypsy]

Seems there will be a bloodbath on Monday.
It should be evident by midday Monday Singapore time how badly things are likely to go this week.

[stephankrasner]

I don't mean to suggest that they are sitting somewhere in a dark room fiendishly planning these outcomes. However, these necessarily follow each stage in capital's development as the emphasis now shifts back to wealth being in the hands of a small group as oppsoed to the brief foray into populist capitalism during the heyday of home ownership.

Dave Emory was predicting stuff like this years ago. http://spitfirelist.com/for-the-record/ ... the-train/ It's interesting that I saw Germany mentioned in an earlier post as being AAA quality.

I'm with Sixstrings on this one. That canary is currently choking on the gas leak that S&P opened intentionally on Friday. The question is will anyone react and open a window before it's catastrophic? The worst of it is that I am only 4-6 months away from being 100% debt free after six years of effort...

[dorlomin]

I am sat here having a wee think. And my thought is "and where will the money go?"

Not to China as they are hugely dependant on exports, have their own debt problems and are flatening out.

Not to Germany as they are now on hock for the whole of southern Europe.

Canada and Oz are OK, but not that big. The Uk and places like Singapore are OK but cant soak up money flowing out of the US.

To late to pile any serious money into gold as you already risk buying into a bubble and if the price adjusts you can lose out hugely in a few hours.

I do not think there is anywhere for money too go to quickly. So this will roil some markets as pensions have to buy into something for their AAAs. But other than that I think this will be more symbolic than actual, cetrainly the big hedge funds and big bond investors have long priced this in.
Other than those who are already doomsteading, we are all already trapped inside the global economy. We always were.

Edited to add I do think though the stock market will drop on this news, it is grossly over valued and expects far to great an economic recovery. This news should kill that optimism and a good 10-20% off the top of stocks would be a reasonable drop IMHO.

[americandream]

I don't mean to suggest that they are sitting somewhere in a dark room fiendishly planning these outcomes. However, these necessarily follow each stage in capital's development as the emphasis now shifts back to wealth being in the hands of a small group as oppsoed to the brief foray into populist capitalism during the heyday of home ownership.

Dave Emory was predicting stuff like this years ago. http://spitfirelist.com/for-the-record/ ... the-train/ It's interesting that I saw Germany mentioned in an earlier post as being AAA quality.

I'm with Sixstrings on this one. That canary is currently choking on the gas leak that S&P opened intentionally on Friday. The question is will anyone react and open a window before it's catastrophic? The worst of it is that I am only 4-6 months away from being 100% debt free after six years of effort...

Keep calm. Nothing is going to happen. You will need to worry when China starts to fall apart and retreats from the Walmart supply chain. Then you will know for sure that the real capital that drives this world via its slave economy is in trouble and the Chinese managers are panicking. Things to look for of course, are aggressive and isolationist belligerrence out of Beijing. Singapore falling apart as pivotal kingpin and of course, resource and territorial grabs in the South China seas as China reaches out to go it alone.