[heroineworshipper]

Didn't make the mainstream news so here it is: link
To revalue currency to pay off mortgages as swiftly as your government did is about as downgrading as U can get. No-one has any confidence in their money anymore but they keep getting pushed to save by silly CNN headlines.
What we need is what analysts of 2002 called "capitulation." In 2002 everyone said, "we need a phase of massive selling of stocks to hit the bottom."

Now there needs to be a phase of massive loss in confidence in dollars & unloading of money if we're ever going to get stability.

[joeltrout]

It seems if this what even a hint of truth that CNBC and other financial news broadcasts would be talking about this non-stop. I don't recall hearing anything about this and I am an avid CNBC & Bloomberg watcher/listener. Who knows I might have missed it but this would be huge news.

joeltrout

[LoneSnark]

This article is nothing more than hype. No credit agency the world over is even suggesting they will downgrade US trasury notes. This article is simply speculating that they might in 10 years time IF stuff goes bad. At that time it will be news. Until then it is simply pointing out that treasury notes are capable of being downgraded, that that they are likely to be.

Move along, nothing to see here. This is not news because it is not new information.

[Tyler_JC]

US Treasury notes, according to this article, are at risk of being downgraded in the next decade.

The Financial Times is not reporting that the downgrade is coming any time soon.



The above picture is a humorous chart from Standard and Poors showing how the bonds of various countries will be downgraded over time, assuming no change in fiscal policy.

That chart was based on the data in this chart:



Now we all know that deficits like that won't happen so the idea that government bonds will be downgraded becomes impossible.

The reason we can't see European deficits that large is that the European Union won't let it happen.

American budget deficits won't grow that large because it would cripple the capital markets and budget hawks would be screaming for a tax hike/spending decrease.

Long story short, downgrading of government debt is an interesting possibility but it is extremely unlikely.

[Hawkcreek]

--

[eastbay]

I have a separate thread dealing with those who speak too much.

U no who u r 2

[Tyler_JC]

$this->bbcode_second_pass_quote('Hawkcreek', '')$this->bbcode_second_pass_quote('', 'P')lease stick to standard English when writing a post. Using "U" instead of "you" or "B" instead of "be" detracts from the quality of your post. This is just a friendly reminder.

[eastbay]

Oh No!! I really thought u were being funny. And u were being serious.

Tyler, I actually chuckled out loud when I read your fine print... heh.

OH well, my response was intended 2 B N jest...

[Hawkcreek]

--

[heroineworshipper]

> American budget deficits won't grow that large

The drinking water injections seem to be working.

[Tyler_JC]

$this->bbcode_second_pass_quote('heroineworshipper', '&')gt; American budget deficits won't grow that large

The drinking water injections seem to be working.

[MrBill]

$this->bbcode_second_pass_quote('eastbay', 'I') have a separate thread dealing with those who speak too much.

U no who u r 2

[eastbay]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('eastbay', 'I') have a separate thread dealing with those who speak too much.

U no who u r 2

[Tyler_JC]

Exactly!

Interest rates will be forced up in order to attract capital. That will force governments to balance their books simply because they won't be able to afford the interest payments.

A deficit of 10% of GDP is just not mathematically plausible.

As for Italy's graph, the writers of the article admit that it is the result of a fluke. Italy recently raised taxes and cut spending, putting them on a better footing...temporarily. But those tax hikes/spending cuts were temporary. Thus, the graph doesn't make sense.

That's why they aren't included in the downgrading graph.

[MrBill]

Ah, thanks for the clarification! Cheers ; - )