U.S. loses AAA credit rating from S&P

http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-idUSTRE7746VF20110806

by micrypt • 15 years ago

14 2 15 years ago

TomOfTTB• 15 years ago

This will certainly have a small impact but it isn't THAT big a deal. Some things to consider.

1. S&P Has 27 different ratings between AAA and D (there are + and - intermediaries so you have AA+, AA, AA- and so on). So put in human terms if the U.S. were a person this would mean a 21 point drop in their FICO score from 850 to 829 (Both of which are fantastic scores)

2. Regardless of what the ratings agencies say interest rates are always negotiable. If you really think individual banks are going to bully the U.S. Government into paying dramatically higher interest rates you're crazy.

3. The world still needs the U.S. economy so no one wants to see it tank. Everyone is acutely aware of what a rise in interest rates on the U.S. consumer would do and no one wants that.

4. Everyone knows S&P's demands to keep the credit rating high were unrealistic. Cut $4 trillion from the Debt in the next decade? At our current rates the U.S. will have a debt of $23 trillion by 2015. So effectively S&P was asking for a more than 50% cut in Government Debt (The added $9 trillion + $4 trillion in cuts). There's no way that could happen (as much as I personally would like to see it)

So basically this is S&P expressing its displeasure with U.S. policy. Definitely something to note but not something to put too much worry into

jamesbritt• 15 years ago

More discussion here: http://news.ycombinator.com/item?id=2852380

U.S. loses AAA credit rating from S&P

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