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QUOTE (StrangeSox @ Aug 5, 2011 -> 06:35 PM)
why is it we put so much stock on the same ratings agencies that helped tank the world economy?

Their ratings are actually given legitimate status in the law. It's a way to work through the requirements to hold good capital to avoid collapsing under losses.

 

Clearly, it didn't work well, and we still haven't reformed them. But there is a kernel of truth here...if I'm a wall street investment firm and I want to invest in marginally-risky companies that could give high return (i.e. some tech company) I need to be able to judge how safe the rest of my investments are so that I know I won't have 6 tech companies go under and suddenly find that my firm is insolvent.

 

There does need to be some mechanism by which that happens. You can't have AIG certify that AIG's assets are A-OK, that's no better than what we got in 2008.

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QUOTE (Balta1701 @ Aug 5, 2011 -> 06:06 PM)
There is a lot of talk happening that S&P is prepping to downgrade the U.S. debt anyway, including reports from CNBC and ABC.

Boom goes the dynamite.

 

However, one of S&P's explicit criticisms of the compromise was that it didn't address the biggest drivers of the nation's debt -- Social Security and Medicare -- and didn't allow for additional tax revenue. ("What's wrong with the debt ceiling deal?")

John Chambers, Head of Sovereign Ratings for S&P, told CNN that though S&P didn't have a specific target in mind, the total debt reduction package was not sufficient. Chambers also noted that the plan did not take steps in the near term to boost economic growth.

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QUOTE (Y2HH @ Aug 5, 2011 -> 11:48 PM)
All I can say is don't be a fool and panic this week, a lot of people are going to lose a lot by selling...wait it out, and if anything, buy in the aftermath (whatever that ends up being).

I wish I had cash laying around in 2008. You could've bought damn near any f***ing thing then and made like 300% off of it.

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QUOTE (lostfan @ Aug 5, 2011 -> 10:49 PM)
I wish I had cash laying around in 2008. You could've bought damn near any f***ing thing then and made like 300% off of it.

 

You may get that opportunity again, but who knows what will happen. If cooler heads prevail, nothing will happen because the rating downgrade means almost nothing since the other major ratings remain at AAA.

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QUOTE (Y2HH @ Aug 5, 2011 -> 11:52 PM)
You may get that opportunity again, but who knows what will happen. If cooler heads prevail, nothing will happen because the rating downgrade means almost nothing since the other major ratings remain at AAA.

I'm guessing that's why they did this on a Friday night. They wanted to make their political statement but they didn't want to set off an instant panic while the markets were open.

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So let me get this straight. S&P admit to making a two trillion dollar error in their assessment of the US creditworthiness, and cite Social Security as a debt driver in the next ten years when Social Security does not contribute to the deficit in any way shape or form. And we're supposed to listen why?

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QUOTE (Rex Kicka** @ Aug 6, 2011 -> 11:25 AM)
So let me get this straight. S&P admit to making a two trillion dollar error in their assessment of the US creditworthiness, and cite Social Security as a debt driver in the next ten years when Social Security does not contribute to the deficit in any way shape or form. And we're supposed to listen why?

 

Keep in mind they're the same people that gave default swap trash mortgages AAA ratings.

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QUOTE (Y2HH @ Aug 6, 2011 -> 12:28 PM)
Keep in mind they're the same people that gave default swap trash mortgages AAA ratings.

A number of articles I've read have said that the statutory rules for the Treasuries being counted as AAA assets are unchanged by having this S&P downgrade, is that correct? I.e. outside of a few obscure places, no one is "Forced" to dump these assets by rules?

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QUOTE (Balta1701 @ Aug 6, 2011 -> 03:01 PM)
A number of articles I've read have said that the statutory rules for the Treasuries being counted as AAA assets are unchanged by having this S&P downgrade, is that correct? I.e. outside of a few obscure places, no one is "Forced" to dump these assets by rules?

 

More than 1 of the 3 need to downgrade for it to actually matter. Also, the downgrades don't actually mean anything, they're more or less just "advise". Japan said they're not changing their policy with the USD regardless of the downgrade -- in other words - Japan said they're completely dismissing the S&P downgrade.

 

What these usually do is cause interest rates to rise ever so slightly, if people listen to them.

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