US AAA credit rating downgraded

[Ed Anger]

None of you are nanny material. Nannies are cute ex-cheerleaders, not Languish crazies.

STAY OUT OF THE HIRING POOL.

[OttoVonBismarck]

There's not much for America to learn from countries with small populations and relatively small economies like Canada and Norway; those countries both can be disproportionately buoyed by relatively minor natural resource boons.

Mmm. Canada is small, but let's not pretend it's Norway. It's got the 9th largest economy in the world, and energy products are 2.9% of its GDP. The service sector and manufacturing together account for something like 94% of the Canadian economy.

So, perhaps there's more to it than "they got lucky thanks to Alberta tar."

No one said that it was all about "getting lucky with Alberta tar" so I agree. Thanks for strawmanning me though you fucking ignorant asswipe.

My point in bringing up the oil sands was that America is so big things like that would be unable to help us. Our politicians are the only ones that can solve our problems and there will not be significant help from any natural resource booms. Your GDP numbers are also a bit deceptive, because large scale natural resource extraction creates huge numbers of service sector and manufacturing jobs to support the work and workers in the field.

The problems Canada faced over a decade ago when they began reforming are very dissimilar to ours. Our armed forces are involved heavily around the world, we spend more in a year on our military than Canada spends on its entire government. On a percentage of GDP level we also have one of the highest rates in the world outside of military dictatorships. I 100% support us ending our role as world cop, but it is such a huge part of out economy it will have some negatives just downsizing the military. If we went back to Clinton era spending on defense (inflation adjusted) the numbers I have seen suggest that reduces the deficit by around 1t over ten years, so that is definitely a significant piece wholly absent from Canada's situation.

Finally until our President becomes an elected dictator ala Westminster style PMs the political calculus of any reform is more akin to what the EU has to go through than what Canada did.

[derspiess]

None of you are nanny material. Nannies are cute ex-cheerleaders, not Languish crazies.

STAY OUT OF THE HIRING POOL.

[alfred russel]

The dollar is up against the euro after the downgrade.

Both are down relative to other currencies like the Swiss Franc and Japanese Yen, however. Moreover, both are suffering, though the Euro is just suffering more than the dollar.

The USD is up against not just the euro but also the pound, the aussie dollar, and the loonie. We are down against the swiss franc and yen. If the downgrade was significant I'd expect a lot more negativity.

[Palisadoes]

The USD is up against not just the euro but also the pound, the aussie dollar, and the loonie. We are down against the swiss franc and yen. If the downgrade was significant I'd expect a lot more negativity.

All of those currencies are doing quite badly at the moment. As for negativity, well stock markets are down ~2% throughout the USA and Europe today despite a positive reaction to the purchasing of Spanish and Italian bonds by the ECB.

[Ideologue]

My sis is already married.  Although rats ass Wisconsin is pretty crappy, it's a damn sight better then goulash land.  I mean, a mysterious red sludge hasn't simply appeared and devoured towns up there.

That's because Steve McQueen defeated it with his ruggedness.

[alfred russel]

The USD is up against not just the euro but also the pound, the aussie dollar, and the loonie. We are down against the swiss franc and yen. If the downgrade was significant I'd expect a lot more negativity.

All of those currencies are doing quite badly at the moment. As for negativity, well stock markets are down ~2% throughout the USA and Europe today despite a positive reaction to the purchasing of Spanish and Italian bonds by the ECB.

But we've basically named all the major currencies of the world!  If the USD is behind the swiss franc and the yen, but ahead of the others, I'd think the driver is something other than increased US default risk.

I think the driver of the markets is the spanish and italian situation, which is only partially offset by the ECB.

I think the best evidence of the irrelevance of the downgrade is that interest rates on 10 year treasuries are falling quite a bit this morning.

[The Minsky Moment]

I think the best evidence of the irrelevance of the downgrade is that interest rates on 10 year treasuries are falling quite a bit this morning.

It doesn't demonstrate irrelevance, it demonstrates the perversity of the markets.
The downgrade is part of the news generating fear and uncertainty in the financial markets.  That prompts a flight to liquidity and perceived safety.  But where can you find a a relatively safe and highly liquid investment asset that can absorb a large inflow of cash?   US Treasuries are just about the only game in town. 

[alfred russel]

I think the best evidence of the irrelevance of the downgrade is that interest rates on 10 year treasuries are falling quite a bit this morning.

It doesn't demonstrate irrelevance, it demonstrates the perversity of the markets.
The downgrade is part of the news generating fear and uncertainty in the financial markets.  That prompts a flight to liquidity and perceived safety.  But where can you find a a relatively safe and highly liquid investment asset that can absorb a large inflow of cash?   US Treasuries are just about the only game in town.

So markets are told treasuries have more risk, which scares people, and scared people run to treasuries?

Maybe to an extent, but what seems more likely to me is there are new reasons to believe eurodoom is about to be unleashed on us all, scaring everyone and making treasuries more attractive (and the dollar more attractive than the euro).

[The Minsky Moment]

So markets are told treasuries have more risk, which scares people, and scared people run to treasuries?

Pretty much.  The downgrade doesn't in itself change the risk profile of Treasuries, which is still quite solid.  But it does reinforce the pre-existing negative sentiment about the economy, because it is now clear that the the US government cannot act as a source of strength for the economy -- the opposite is more likely.  Think what would happen if a Lehman-style even occurred now: the federal government would neither have the financial firepower, the political support, or the legal authority to act decisively.

The Euromess is a factor in the negative sense that Euro-sovereigns can't act effectively as an alternative draw for investors seeking more liquidity and less risk.  There was no news over the weekend which affected the fundamentals of the Eurosovereigns (other than ECB growing a pair and buying Med debt, which is a net positive for the market).

[MadImmortalMan]

It's the "all the alternatives are worse" syndrome.

[Josephus]

Im keeping my savings in my mattress, where no one can touch it.

[HVC]

Im keeping my savings in my mattress, where no one can touch it.

Go old school. Cans filled with money buried randomly in your backyard.

[garbon]

Im keeping my savings in my mattress, where no one can touch it.

A neighbor of my grandparents did that and her house burnt down twice.

[KRonn]

Im keeping my savings in my mattress, where no one can touch it.

Go old school. Cans filled with money buried randomly in your backyard.

Or keep your money in your backyard bomb shelter, safely locked away.