Britain moves closer to losing prized AAA credit rating :: Standard & Poor

Debt approaching 100% of GDP apparently...

I'm dubious as to the significance of this.

Firstly, I don't trust the ratings agencies. Secondly, this might be the first in a series of revisions that might include other EU countries and the US. Thirdly, it's an "outlook", and as such an attempt to predict the future. Fourthly, Fitch's have issued an an unequivocal "no change" in response.

Did you see the report where Greenspan is quoted as saying that the big banks may still need more capital?

No. Got a link?

601087&sid=aiOYLnM2WxuA&refer=home I see the indices are on the slide again (or they were an hour ago).

Yes, sterling and the FTSE fell.

But you know, the difference between UK gilt and eurobond interest rates is at the lowest it's been for months, even though it increased a little this morning. That's one measure of stability that S&P seems to have ignored.

I'm not trying to big up Gordo here, just curious as to the real situation.

'DVH' wrote thus:

Whatever, if our AAA rating is removed, it will mean buyers of UK Gilts will demand higher interest rates before they lend. That means more govt spending on debt repayments, which means less to spend on public services etc and/or higher taxes. It could also mean that future UK Gilt auctions are not successful and that we have to go the IMF to borrow the money.

And it might rain for forty days and forty nights!

What you say is true, on condition that the AAA rating is changed. But whether the rating is changed is the question...

'DVH' wrote thus:

Looks to be irrelevant. More important is that buyers of UK Gilts still trust them.

Not sure how relevant that is.

Sure, our AAA hasn't been removed *yet*. Subject: "Britain moves closer to losing prized AAA credit rating"

S&P are highly regarded afaik.

They sold at the auction this morning, in spite of the S&P negative warning.

Not just the UK - all indices are down across the board on Bloomerg.

Aren't we all! I am coming to the conclusion that they don't really know themselves...

Oh really you still believe in S&Ps credit ra(n)tings ? !

HAHAHAHAHAHAHAHA

I think you're right.

I've been studying transport stats pretty hard in recent weeks - shipping movements, freight rates, and whatnot - and raw material costs - iron ore and so on. On the grounds that the start of the supply chain ought to give some indicator as to future behaviour.

It doesn't look particularly good.

I might post some stuff about it, if I can work it into something interesting.

Someone obviously does! | "The pound tumbled 3 U.S. cents, bonds nosedived and the FTSE-100 stock index lost almost 2 percent on Thursday after ratings agency Standard and Poor's issued this warning, saying that Britain's outlook was "negative" and no longer "stable."

Indeed.

The problem is that we can only know the situation of the economy after various governments have thrown trillions at it. Trillions they don't have. As that runs out, and the wherewithal of governments to risk throwing (or printing) more trillions into the maw rns out, we'll begin again to find out the true state of the various economies.

My belief is that deleveraging, deflation, reduced debt and reduced asset prices are the cure for the problem (the problem being the credit bubble) and interference by sundry governments has merely served to delay it.

The medicine can't be put off forever. Indeed it has been put off since

1998 by repeated attempts to goose economies by interest rate cuts and the fomenting of new bubbles, the results of which we are witnessing.

If putting off a 1998 recession has led to a near depression now, just how sensible is it to try to put off this near depression given what that would almost certainly lead to?

FoFP

This is small time market behaviour. It's not stimulated by the news of S&P's announcement, it's stimulated by traders thinking that other traders will think that other traders might sell sterling at some point.

Then when their line manager comes into the office and says "did you notice S&P's announcement?" they can proudly say "yes we did, we've got our eye on the ball you see. And we sold some currency to prove it".

'DVH' wrote thus:

Or even longer ;-)

Indeed. hence my Subject:

"Britain moves closer to losing prized AAA credit rating"

Not "Britain has lost, or is about to lose, it".

However, if public finances continue to deteriorate, it would not surprise me if that happened. This is the risk.

Recall the two articles you posted yesterday both said in different words that public finances are out of control.

'Maria' wrote thus:

Did they? Fine I think the S&P notice is a warning...

'"Eliot Montevideo" ' wrote thus:

I don't buy UK Gilts, but those who do believe in S&P. Credit ratings are a yardstick used to help determine risk.