It appears you have not yet registered with our community. To register please click here.

Origin XT RPG Network Home

S&P Downgrade


Aug 8 2011, 05:28 PM (Post #1)
Lieutenant
* * * * *
Posts: 894
Cash: -4,376 / 3,952
Group: Citizen
Joined: 12/18/07 07:25 AM
And everyone's stock portfolio is getting hammered...

Thoughts? Sarah Palin's got to be to blame somehow, eh?
Post Options

 
Aug 9 2011, 06:27 AM (Post #2)
Not Odd anymore
* * * * * * * * * *
Posts: 45,875
Cash: 1,915,578 / 1,817,041,051
Group: Administrator
Joined: 7/10/02 09:48 PM
The S&P downgrade is a statement from S&P about the riskiness of US debt. However, if you take a look at the yield changes today (http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/), you'll see that the yields (long term) have shrunk, which means that the implied riskiness of treasuries have actually fallen. Equivalently said, the price of the treasuries rose today.

The stock market was not necessarily a reaction to the downgrade; it was a reaction to a new fear that a recession is coming again, and that the contagion in Greece will spread to larger countries like Italy.
Post Options

Aug 9 2011, 09:26 PM (Post #3)
Lieutenant
* * * * *
Posts: 894
Cash: -4,376 / 3,952
Group: Citizen
Joined: 12/18/07 07:25 AM
QUOTE (Jinghao @ Aug 9 2011, 01:27 AM)
The S&P downgrade is a statement from S&P about the riskiness of US debt. However, if you take a look at the yield changes today (http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/), you'll see that the yields (long term) have shrunk, which means that the implied riskiness of treasuries have actually fallen. Equivalently said, the price of the treasuries rose today.

The stock market was not necessarily a reaction to the downgrade; it was a reaction to a new fear that a recession is coming again, and that the contagion in Greece will spread to larger countries like Italy.
*



The stock market's decline over the past few weeks is more directly linked to the Euro crisis and dismal economic outlooks across the board—but Monday's collapse was largely attributable to the psychological/symbolic effect of the downgrade.

As for the downgrade itself, I think it's been a long time coming and it's not over yet (Fitch, Moody's). The blame one sees evrerywhere is very misplaced. Obama policies can factor in a little bit, as can the debt ceiling compromise but everyone knows the downgrade and more vocal negative outlooks have been a long time coming. It must be said that the lack of more obvious presidential leadership and the Obama administration's public indifference—if not open hostility—toward business and especially Wall Street is starting to cement a Wall Street-Washington divide and outfits like S&P aren't taking it lightly.
Post Options

Aug 15 2011, 04:32 PM (Post #4)
Colonel
* * * * * *
Posts: 2,579
Cash: 46,264 / 266,023
Group: Nobility
Joined: 12/14/05 03:32 PM
exactly what jingy said....really nothing to add to that. I dont believe the downgrade from one credit rating agency is to blame...
Post Options