4 ms·
If the government that produces the reserve currency can't hold up a AAA rating, what can? The idea that anything else should have a AAA rating if the US gov't
by silverlight 15y ago
If the government that produces the reserve currency can't hold up a AAA rating, what can? The idea that anything else should have a AAA rating if the US gov't doesn't seems a little ridiculous to me on face value.
- jackpirate 15y agoThat's one of the MAJOR implications of this, if I'm not mistaken. Of course, bonds denoted in Euro's or other currencies wouldn't be affected.
- mdda 15y agoThe implication is really the other way around. The USD was the reserve currency in part because of the credibility of the US government's financials (and also because of amount of trade, etc). But obviously, the US has taken a huge beating credibility-wise recently. After all, Sterling used to be the world's reserve currency : things change.
- cfaubell 15y agoThere are countries who don't use debt payments as political tools. A congressional stalemate that leads to a failure to pay bondholders is entirely possible.
- Atropos 15y agoSome other AAA countries: Switzerland, Luxembourg, Norway, Singapore. To me it seems a little ridiculous that the US and these countries shared the same rating for such a long time. On the other hand, there are AAA countries like UK, France, Germany that do not seem to fit into the same category either. I have no real opinion if the US deserves the AAA rating, but thinking treasuries are the safest investment in the world seems a bit optimistic.