France loses AAA Credit Rating. Britain doesn't. WE have something right.

[Anna Glypta]

It's especially ludicrous when they were rating banks as AAA around 4 hours before they ran out of money. The whole damn thing is ludicrous.

 

But the fact remains that investors listen to what they have to say so its pretty academic what the man in the street thinks.

 

This is actually what S&P said. I'm not really sure that I could disagree with it.

In our view, the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone.

We are lowering our long-term ratings on nine eurozone sovereigns and affirming the ratings on seven.

The outlooks on our ratings on all but two of the 16 eurozone sovereigns are negative. The ratings on all 16 sovereigns have been removed from CreditWatch, where they were placed with negative implications on Dec. 5, 2011 (except for Cyprus, which was first placed on CreditWatch on Aug. 12, 2011).

[Rupert_Baehr]

The fact that the UK has one of the best credit ratings in the world and enjoys some of the cheapest borrowing as a result really seems to be upsetting the usual suspects.

 

Credit ratings do not set the price the market is prepared to pay for bonds, though they do influence it.

 

If the demand is high at a given interest rate then bonds will sell at that interest rate.

 

If the BoE is buying up government bonds then it is stimulating an artificial demand and holding down the interest rate artificially.

 

The government (or any issuer) of a bond can set both the price and the interest rate, but if the bonds are re-sold in the secondary market (and many are) the price they will fetch depends on the interest rate. If you bought a £1000 bond in the primary market which offered a yield of 2% (because that was the going rate when the bond was offered) and interest rates rose to 4%, then you wouldn't be able to sell the bond for what you paid for it. If you held on to it to maturity (and if it was a government bond), you would get back the face value and you would receive interest at 2% until you redeemed it. Other people would be getting 4% on their bonds.

 

Assuming you had bought that 2% bond and the price in the secondary market was considerably less than you had paid, would you be keen to buy another? Even at 4%?

 

Should the buyers decide that the BoE (or anybody else) is interfering in the market to hold down the interest rates where do you think they will put their money?

[Balpin]

It is amazing why so many people on here are obsessed by this nonsense.

This so called crisis is self imposed.

In reality there is no such thing as money and credit.

All wealth is based on a nations people and its infrastructure.

 

In our country, the problems started with Thatcher's desire to punish the people for defying Head Teeth, and by extention her.

 

She therefore destroyed our industry, and created mass unemployment.

We therefore have a very small working class, and hardly any industry.

We have a vast idle class, at the bottom and top of society, both being drains on the workers.

 

We really have no wealth at all these days.

Thanks to her.

[Rupert_Baehr]

When ratings agencies were pressed by US congressmen investigating the 2008 collapse the agencies stated they were just expressing opinions. That's all they do. They're just a bunch of researchers and economists who are no better than any other researchers or economists. The problem is their 'opinions' have gained institutionalised acceptance, taken as gospel. It's ludicrous really.

 

Why is it ludicrous?

 

If you were going to buy a car and you wanted a car with a petrol engine, 4 passenger doors, 5 seats and a manual transmission, then there are plenty on the market.

 

You could (if you really wished) write to everybody who had purchased a particular model of car and ask them about their experiences.

 

Or you could ask a friend.

 

Or you could read a report in a Car Magazine.

 

Or you could test drive a car and make up your mind solely on the basis of a few miles experience.

 

Sometimes the companies which publish road test reports get it right and sometimes they get it wrong. Sometimes Road test reports disagree with one another.

 

They too have gained widespread acceptance. Should they be banned because they sometimes get it wrong? If you were a car manufacturer and one of the cars you make was slated in one or more road test reports, would you petition to have road test reports banned?

 

You might, but I doubt you'd get very far. You'd probably do better if you improved your manufacturing standards, recalled cars which had problems and were seen to be improving. It would cost you money, but it would (hopefully) be worth it.

 

The British government has taken steps to reduce the deficit and to boost confidence in the UK economy. The actions they've taken are causing a lot of financial pain for a lot of people, but - it seems - confidence in the UK has remained strong. That confidence may (or may not) be justified, but it is there - and that's why the UK still has a AAA rating.

[Mecky]

"France loses AAA Credit Rating. Britain doesn't. WE have something right. "

 

At the moment perhaps, but there's a long way to go. I suspect the UK will lost it's AAA rating before too long anyway. Why does an AAA rating matter? The only possible reason is that we can borrow on credit, but we were told we're not to borrow cash and cut spending, despite the fact that borrowing has been up since Disaterous Dave seized power at the last election 2 years ago.

[Rupert_Baehr]

"France loses AAA Credit Rating. Britain doesn't. WE have something right. "

 

At the moment perhaps, but there's a long way to go. I suspect the UK will lost it's AAA rating before too long anyway. Why does an AAA rating matter? The only possible reason is that we can borrow on credit, but we were told we're not to borrow cash and cut spending, despite the fact that borrowing has been up since Disaterous Dave seized power at the last election 2 years ago.

 

C'mon, Mecky! You're not that stupid!

 

When you borrow money, you have to pay interest on the loan.

 

If you have an AAA rating, you pay a given rate of interest.

 

If you have an AA, then the interest you have to pay is considerably higher.

 

Are you really telling us you don't understand that?

 

The country needs to borrow money. The Caledonian trouser snake expanded on the profligacy of his bosses predecesor (himself) and plunged the nation into massive debt.

 

Nobody has a plan to pay off the debt. The present shower of shi'tes are trying to reduce the rate at which the debt increases.

 

Not only is the debt going to increase, but the rate at which the debt is going to increase for a while, too.

 

And you can't see why interest rated/bond rates are important?

 

As my mum said to me:

 

'Sometimes it's better to keep your mouth shut and let people think that you're a prat than to open it and remove all doubt.'

 

Are you on talking terms with your Mum?

[purdy]

"France loses AAA Credit Rating. Britain doesn't. WE have something right. "

 

At the moment perhaps, but there's a long way to go. I suspect the UK will lost it's AAA rating before too long anyway. Why does an AAA rating matter? The only possible reason is that we can borrow on credit, but we were told we're not to borrow cash and cut spending, despite the fact that borrowing has been up since Disaterous Dave seized power at the last election 2 years ago.

 

Well the coalition inherited a £1 trillion debt and a deficit between tax revenue and spending of £175 billion. I presume that you feel the cuts haven't been deep enough. There is light at the end of the tunnel.

[purdy]

A reality check for America after they lost their AAA rating a few months ago.

 

http://usdebt.kleptocracy.us/

[junction1]

I wonder what odds I could get on Germany already printing Deutschmarks?

[JFKvsNixon]

I wonder what odds I could get on Germany already printing Deutschmarks?

 

Very low odds, as it's been reported that they are.