US will eventually lose AAA credit rating

US will eventually lose AAA credit rating

rawstory.com

The co-chief investment officer of the world’s largest bond fund said the US will eventually lose its top AAA credit rating the same day that Standard and Poor’s rating service downgraded Britain’s national debt from stable to negative.

The US will likely be downgraded in “at least three to four years, if that, but the market will recognize the problems before the rating services - just like it did today,” said Bill Gross of Pacific Investment Management Co.

(visit the link for the full news article)

I am surprised this hasn't already happened . What will this mean long term ? I am guessing one thing that will be effected will be the cost to service the debt , meaning a larger defect to cover the interest payments .
Will this also effect the value of the dollar ? I would guess if the Fed decides to print more money to cover the higher interest payments then the dollar will surly be effected .
It would seem that sooner or later the government will have no choice but to make drastic cuts in its spending .

rawstory.com
(visit the link for the full news article)

You mean they haven't already?

two lines

Whats a AAA rating ? What does this rating thing mean ?

2nd line

reply to post by thecrow001



From my limited understanding of the matter it is the equivalent of a countries credit ratting . So a country with a poor rating will pay more to borrow and service there debt .

Edit to add . AAA is the highest rating , once again from my limited understanding of the matter

[edit on 22-5-2009 by Max_TO]

It will mean higher interest rates, and less spending for america.

So what does that mean eventually for the american system, of spending?

reply to post by Max_TO


o right so by that, once they lose the AAA Rating they are going to be paying more on what they borrow which i dont see how thats going to help.

Also Englands Screwed to and then Great Britain.

Depression and anger within the public is going to be some thing to watch out pretty soon,

All this debt and bad news.


Then You'll get a depressed and angy Brits and Americans .

They dont know what there waking

OR DO THEY

reply to post by andy1033


Good point , and if those rates do go up in 3 or 4 years as the report goes , just what will that do to an economy that is trying to climb out of recession ? Is not the only thing prompting people to spend right now a very low interest rate ?

Mix that with a devalued dollar and things could be looking very bad for the for the future

The government will be forced to make cutbacks deeper then the nation has ever seen before .

Another thing that might become a way of life is the selling of government assets as a means to pay back some of the debt .

The companies that the government now finds themselves buying could very well end up being soled for pennies to foreign countries , like China .

You should read up on the AAA rating and its role in the great depression.

This could a good indicator of worse things to come.

Originally posted by Walkswithfish
You should read up on the AAA rating and its role in the great depression.

This could a good indicator of worse things to come.

I'd like to you elaborate, because I consider myself very well versed in the great depression, and I don't recall AAA ratings having anything to do with it. The U.S. has had a AAA since World War I. Are you mistaken and thinking of the Agricultural Adjustment Administration during the Great Depression? Because the reason the for the great depression was a contraction in the money supply by 1/3rd at the hands of the Federal Reserve. I hope we do lose our AAA rating, then maybe people will get more pissed off and we'll spend less public money...that won't happen though, the people are sheep and will just deal with the tax hikes.

reply to post by yellowcard


I think you may be giving the people a little to much credit , pardon the pun .

If the rating was lowered from a , AAA rating , I doubt the " people" would even take notice .

Originally posted by thecrow001
Whats a AAA rating ? What does this rating thing mean ?
2nd line

Here you go a much more in depth answer to your query.
Bond Credit Rating

In investment, the bond credit rating assesses the credit worthiness of a corporation's debt issues. It is analogous to credit ratings for individuals and countries. The credit rating is a financial indicator to potential investors of debt securities such as bonds. These are assigned by credit rating agencies such as Moody's, Standard & Poor's, and Fitch have letter designations such as AAA, B, CC.

I find this odd? The US hasn't failed on any of it's loans so I don't see a real reason outside of "Fear" in the market place. No big deal really we are still going to be fine. The new AA+ rating is still much higher than the vast majority of the planet.

Also we wont be loosing our Tier 1 status.
Know your country's ratings. I was surprised to see China with only a Tier 3 rating.

Raw Data
CRP-Global Summery

Country Risk Criteria
A.M. Best defines country risk (read the methodology) as the risk that country-specific factors could adversely affect an insurer's ability to meet its financial obligations. Country risk is evaluated and factored into all A.M. Best ratings. As part of evaluating country risk, A.M. Best identifies the various factors within a country that may directly or indirectly affect an insurance company.

Countries are placed into one of five tiers, ranging from Country Risk Tier 1 (CRT-1), denoting a stable environment with the least amount of risk, to Country Risk Tier 5 (CRT-5) for countries that pose the most risk and, therefore, the greatest challenge to an insurer's financial stability, strength and performance.

[edit on 22-5-2009 by SLAYER69]

I am wondering , is there a way to see a list of all the states individual credit ratings ?

Here are a couple of related links ,

State's credit rating falls to worst in nation www.sfgate.com.../c/a/2009/02/03/BAJ015MPQD.DTL
" California has the worst credit rating of any of the 50 states, according to Standard & Poor's, which downgraded the Golden State's score from "A+" to "A" this week. "

A.M. Best Downgrades Issuer Credit Rating of South Dakota State Medical Holding Co., Inc. www.thefreelibrary.com...
"OLDWICK, N.J. -- A.M. Best Co. has downgraded the issuer credit rating to "bb" from "bb+" and affirmed rength rating of B (Fair) of South Dakota State Medical Holding Co., Inc. (d/b/a DakotaCare) (Sioux Falls, SD). The outlook for both ratings has been revised to negative from stable. "

State Bond Rating Reports www.vermonttreasurer.gov...

" A credit rating is an independent assessment of the creditworthiness of an entity, a bond, or any similar borrowing instrument. It measures the probability of the timely repayment of principal and interest of a debt obligation by the issuer. Generally, a higher credit rating leads to a more favorable effect on the marketability of a bond, likely reducing the interest rate and the resulting debt service to the State. Long-term credit rating symbols are generally assigned with "triple A" as the highest and "triple B" (or Baa) as the lowest in investment grade. Anything below triple B is non-investment grade, and is commonly known as a "junk bond."

State Moody's S & P Fitch
Vermont Aaa AA+ AA+
Connecticut Aa3 AA AA
Maine Aa3 AA AA
Massachusetts Aa2 AA AA
New Hampshire Aa2 AA AA
Rhode Island Aa3 AA AA -