T Nation

US Treasuries Downgraded from AAA to AA


#1

Homburg, 8 June 2011 - The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency's credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.

"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. "Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted."

For the third consecutive year the deficit of the United States is in double digit percentages relative to gross domestic product (GDP). "Deficits of such magnitude are not a sustainable fiscal policy. We would reconsider the rating when the U.S. government creates a long-term sustainable budget," said Schmidt.

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

The collapse has begun in earnest.


#2

[quote]Headhunter wrote:
Homburg, 8 June 2011 - The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency’s credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.

"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. “Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted.”

For the third consecutive year the deficit of the United States is in double digit percentages relative to gross domestic product (GDP). “Deficits of such magnitude are not a sustainable fiscal policy. We would reconsider the rating when the U.S. government creates a long-term sustainable budget,” said Schmidt.

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

The collapse has begun in earnest.
[/quote]

And the Dow’s down 130 points.


#3

This whole rating system is entirely inadequate for our new shining era of progressivism.

I would like to read a headline like “Greeces treasury bonds have been downgraded from Holy Shit! to WTF!?!”


#4

[quote]orion wrote:
This whole rating system is entirely inadequate for our new shining era of progressivism.

I would like to read a headline like “Greeces treasury bonds have been downgraded from Holy Shit! to WTF!?!”[/quote]

Hahaha, that would be amazing.


#5

[quote]reddog6376 wrote:

[quote]Headhunter wrote:
Homburg, 8 June 2011 - The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency’s credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.

"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. “Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted.”

For the third consecutive year the deficit of the United States is in double digit percentages relative to gross domestic product (GDP). “Deficits of such magnitude are not a sustainable fiscal policy. We would reconsider the rating when the U.S. government creates a long-term sustainable budget,” said Schmidt.

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

The collapse has begun in earnest.
[/quote]

And the Dow’s down 130 points.[/quote]

Watch what happens when something like Moody’s downgrades us. Yikes!!


#6

[quote]Bonesaw93 wrote:

[quote]orion wrote:
This whole rating system is entirely inadequate for our new shining era of progressivism.

I would like to read a headline like “Greeces treasury bonds have been downgraded from Holy Shit! to WTF!?!”[/quote]

Hahaha, that would be amazing.
[/quote]

And more accurate.


#7

How the hell is it still AA? It should be Junk.


#8

Christ, debt ratings are so subjective to begin with anyway… Every rating agency has their own interpretation of what “strong vs weak” is anyway, and we’re supposed to freak out about some no-name German firm downgrading U.S. securities from “strong” to “strong”?

Karabell offers some solid insight to the U.S. debt “crisis”:

http://www.time.com/time/magazine/article/0,9171,1969745,00.html

Bottom line - U.S. Treasuries are still the most secure investments on the face of the planet, if they weren’t, then why are they still the number 1 holding in virtually every large portfolio on Earth?

Not trying to start a fight, just offering some rational insight here.