Germans Downgrade US Government Bonds: AAA to AA

[AZKing]

The first Western downgrade of US government bonds is a fact! The German credit rating agency Feri lowered its rating on US debt by a full notch, from AAA to AA.

http://www.zerohedge.com/article/german-rating-agency-feri-downgrades-us-government-bonds-aaa-aa

 

[sailingaway]

Wow.

 

[jdmyprez_deo_vindice]

Most people will not care because they do not know what it means. I just mentioned it to my neighbor and his response was: "So you mean the U.S. has a credit score?"

 

[rp4prez]

Most people will not care because they do not know what it means. I just mentioned it to my neighbor and his response was: "So you mean the U.S. has a credit score?"

*face palm*

 

[hazek]

Most people will not care because they do not know what it means. I just mentioned it to my neighbor and his response was: "So you mean the U.S. has a credit score?"

Oh economic illiteracy, how I fking hate you.

 

[Travlyr]

Oh economic illiteracy, how I fking hate you.

No doubt. It thoroughly disgusts me that I was never presented with economic literacy in all my years of schooling.

 

[AFPVet]

What? You mean the money guys on mainstream news aren't telling the people about the significance of the U.S. credit rating?

In a related matter, I have never taken an economics course in college lol; however, it doesn't take an ECON course to figure out that a bad U.S. credit rating is going to put a serious hurt on us.

 

[hazek]

I know right.. They taught us every bullshit you can think of except economic literacy.

 

[Travlyr]

I know right.. They taught us every bullshit you can think of except economic literacy.

They taught us how to duck under our desks in case of a nuclear attack. Man oh man was I scared of the commies... and hoping the desk was stronger than the ceiling.

Now the German commies are downgrading us. lulz...

Oh wait... they aren't commies anymore... are they?

 

[Wesley123]

Hopefully this means it will begin to be harder for the U.S. to keep borrowing so much.

 

[Gaddafi Duck]

http://www.zerohedge.com/article/german-rating-agency-feri-downgrades-us-government-bonds-aaa-aa

I don't know what's worse, the fact that the United States' credit rating is STILL far above investment grade or the fact that people still listen to what rating agencies have to say.

I know it's a popular theme to be bearish and anti-US government--trust me, I'm an anarchist. But I find it funny we listen to the analysis of people like Peter Schiff and Jim Rogers who say rating agencies have been wrong for years, yet we find it significant that a rating agency cut the US credit rating from an A++ to A+. In the investment world, the United States still has a 4.0 GPA with a AA rating. We just aren't high school students taking college classes.

 

[Bryan]

Here's the report, using google translate from German to English:

Feri ranks the creditworthiness of the United States down
Bad Homburg, 8 June 2011

-
The Bad Homburg € Feri Rating & Research AG hatals first rating agency's credit rating to the U.S. from AAA to AA herabgestuft.Feri analysts justify the step with the continuing deterioration of the country derBonität result of high public debt, inadequate Maßnahmenzur fiscal consolidation and weaker growth prospects.
"The U.S.
Government has the impact of the financial market crisis has so far primarily by an increase in government debt fought. We do not see that here
countermeasures are sufficient, "says
Dr. Tobias Schmidt, CEO of FeriEuroRating Services AG
. "Our rating
System clearly shows a deterioration in, so the downgrade of credit ratings of the U.S., the logical
Episode. "
For the third consecutive year is the deficit of the United States in relation zumBruttoinlandsprodukt (GDP)
double-digit percentage range. "Such a deficits
Sizes are not compatible with a sustainable fiscal policy. At einbesseres rating is to think again when the U.S. government its budget
consolidated long-term sustainable, "Schmidt concluded.
Feri Rating & € is on the Federal Financial Supervisory Authority (BaFin) as an EU credit rating agency approved and created more than 20 country-year ratings. Every month, the Feri analysts evaluate from the perspective of a ausländischenInvestors the ability and willingness of States to increase their debt repaid. The result is the evaluated country has a credit rating in eleven
possible gradations between "AAA" (best credit) and "Default".
About € Feri Rating & Research AG
€ Feri Rating & Research GmbH is one of Europe's leading rating agencies for the analysis and evaluation of investment markets and products and one of the largest economic forecasting and research institutes. Currently, the company serves approximately 1,000 customers about 50 employees and maintains its headquarters in Bad Homburg with offices in London, Paris and New York.
Contact:
Steffen RinasStockheim Media GmbHTel. 069 / 13 38 [email protected]
Feri Downgrades U.S. Gov Debt AAA to AA
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[hazek]

It's a train wreck in slow motion.. Even if the rating agencies obviously are meaningless and even completely wrong but they do show us how far into train wreck we are..

 

[hugolp]

It's a train wreck in slow motion.. Even if the rating agencies obviously are meaningless and even completely wrong but they do show us how far into train wreck we are..

Rating agencies are just another political tool nowadays. The rating agencies of each country just answer to the politicians of each country.

 

[Acala]

Rating agency decisions are NOT meaningless even though they might be wrong. Major investors - like pension plans, insurance companies, and such - usually operate under binding rules (or government regulations) that prohibit them from holding bonds below a certain rating. So a lowered bond rating from one of these agencies can mean that a massive sell-off would be MANDATORY.

 

[AZKing]

Most people will not care because they do not know what it means. I just mentioned it to my neighbor and his response was: "So you mean the U.S. has a credit score?"

I do believe that the bond markets are quite smart. I'm just wondering why the f*** commodities are all down today given that the UN, Chinese, and Germany have been pressing the debt issue for the last week.

 

[Zippyjuan]

AAA to AA would probably not trigger a selloff. If it went to say B or lower it might for some funds. Instead of getting 100% on your latest exam, you got a 90%. You are not failing the class yet. More of a warning you need to do better than having any real penalty.

 

[mojobo]

I do believe that the bond markets are quite smart. I'm just wondering why the f*** commodities are all down today given that the UN, Chinese, and Germany have been pressing the debt issue for the last week.

It could be that citizens in these nations are starting to see that their governments will eventually stop devaluing their currencies to buy our debt so commodities don't seem like as good of an investment in terms of their currency.

 

[Acala]

AAA to AA would probably not trigger a selloff. If it went to say B or lower it might for some funds. Instead of getting 100% on your latest exam, you got a 90%. You are not failing the class yet. More of a warning you need to do better than having any real penalty.

It depends on the fund. For example, I don't think the Arizona State pension fund can hold anything but AAA bonds. Of course this begs the question as to which rating agency's rating will apply. Pretty sure the Arizona Pension fund will not care about a German rating agency. If one of the major US agencies downgraded US bonds to AA, I think there would be a substantial sell off. But, as was pointed out in this thread, the rating agencies are political. I think the world will be using US bonds as tinder before a US rating agency downgrades US bonds.

 

[KingRobbStark]

If it was a true rating agency, they would have downgraded it to SHIT a long time ago.