Is the United States lost its credit rating one notch

Is the United States lost its credit rating one notch

 
United States lost the high credit rating (AAA) by the credit rating agency Standard & Poor's on Friday in an unprecedented amendment to place the largest economy in the world.
And reduced the credit rating of the institution of the United States in the long term to one degree (AA +) because of concerns about the government's budget deficit and high debt burdens. It is likely that this step increase borrowing costs in the end for the U.S. government, companies and consumers.
The S & P said in a statement that "This reduction reflects our view that fiscal consolidation plan approved by Congress and the administration in recent times do not reach in our opinion, to the extent that is necessary to achieve stability in the mechanics of government debt over the medium term."
The decision comes after a fierce political battle in Congress over spending cuts and tax increases to reduce the burden of government debt and borrowing ceiling to allow more legal for the government.
The S & P said in a statement that the future of the credit rating of the new United States, "negative" in a sign of the possibility of another cut in the next twelve and eighteen months, the next
For his part, said Mohsen Adel, financial analyst, that the classification of the United States was regarded as one of its strengths basic, but that the reduction that has occurred hurt by pointing out that U.S. Treasury bonds, which was seen in the past as the best safety in the world without conflict, and now classified less than bonds issued by countries such as Britain or Germany or France or Canada.
He explained that the downgrade the United States, will carry with him the implications on the global economy generally. It is expected to increase interest rates in the light of the reduction, the value of the dollar would fall. For its part, changed the agency «Standard & Poor's» has just the outlook to negative for five large insurance companies, which are very concentrated in the United States. In the case of classification of the United States dropped AAA, the main impact will be on the reputation of the country, and of course will reflect on the credibility and solvency of the U.S. government and the narrow margins between treasury bills and corporate bonds. Vorac Treasury declined in value, and caused an increase in yield,
Revealed his belief that the demand for U.S. bonds may be reduced, and thus may turn investors toward bonds issued in euros, and the devaluation of the dollar against the euro. The goods are expected to vary their prices trends.
He believed that the panic that gripped financial markets in the world for fear of a recession for the U.S. economy and because of the debt crisis of the European «is exaggerated», explaining that fever sale of shares in international stock markets at the moment because of this panic that is similar to «herd behavior», stressing that the collapse of the tragic in equity markets that occurred during the last few days is not justified, not from the perspective of behavior that is not wary of companies from the perspective of the problem of debt in Europe and the United States.
Confirmed that global markets did not pay attention enough to the positive signals resulting from the agreement in the United States raising the ceiling of public debt and the adoption of the euro group leaders for a second aid package to Greece. He believed that the financial markets look back balance in the coming weeks. He is not likely recession in the U.S. economy, stressing that the low prices of the interest, fiscal and monetary policy of the government is one of the great stability of the U.S. economy this year.
He said that the collapse in global stock markets is an exaggeration, P «sold shares just because the other shares were sold». He added that some companies have achieved quarterly results are excellent, and felt that reducing some of the companies from its forecast of results next is not cause for panic in the markets, P «Such a procedure is not new and do every company is serious», indicating that the fever sale of shares due to fears of possible recession like «herd behavior», and saw that the financial markets is back calm, «but not from day to day».
Revealed that the markets had already had a few scenarios on classifications of U.S. thought that the reduction was one of them, adding that "the classification of AA is no different from the classification of AAA when it comes to risk on assets held by investors, according to the outline of the Basel Convention 3 and then there will be no significant direct impact on the near term. and there are no alternatives (to turn). "
He stressed that due to a reduction of the credit rating of the United States, the financial markets as well as the bond market, Treasury will suffer from fluctuations in the near term, stressing that reducing the sovereign rating the U.S. are moderately contributed to the government securities "bond" is expected to keep its place as an important indicator of investment income fixed at the global level and support that the matter is that the size of the U.S. Treasury bond market of $ 9.3 trillion equivalent to almost five times the "almost" the size of his French counterpart at 1.9 trillion dollars, and British at 1.8 trillion dollars, as well as German at 1.6 trillion dollars.
He said there is another factor important supports the dominance of U.S. Treasury bonds is a huge liquidity enjoyed by, where the volume of daily trading in the market for these bonds to 580 billion dollars, almost ten times higher than his British counterpart, at $ 34 billion, and $ 28 billion of bonds the German saying The biggest concern is the reduction in credit rating of America to undermine the financial position of the country in the world and its ability to borrow the benefits are very cheap to finance government operations, indicating that investors around the world are seeking investments with high ratings may have to sell them if they fell. It was then the U.S. Treasury Bill investments more secure.
This is not the first controversy on classification companies which reviews and assessments set bonds issued by governments and private companies. Companies have abused classification of many of the investments based on mortgages that led to the poison in the 2008 financial crisis. Which called for the United States to reduce its financial sector, the adoption of the categories.
He said that the crisis facing the United States put a lot of creditors have to big problems, as the investments of creditor nations are concentrated in the permissions and bonds issued by the U.S. Treasury, comes reduced to assure that these bonds - but remains reliable until this moment - will drop their prices in the capital markets secondary Valdaúnon wishing to obtain liquidity or diversification of their investments will have to sell part of their portfolio securities at prices lower than U.S. prices that they bought them, and thus incur capital losses on their investments out.
And about the implications of the crisis the U.S. on the economies of the Arab world, he said, just that the implications of this earthquake on the economies of the Arab world will be obvious, especially since this crisis is not Balhaddath, as it worsened over the past ten years, and exactly since 2000, when the ceiling of U.S. debt in the range of 5950 one billion dollars, while the roof has become the religion now in the range of $ 14.3 trillion, which means that he has more than once in ten years, and the reasons for this are known, including the wars in Afghanistan and Iraq and the high costs the U.S. internally and externally.
He said it was on the decline in value of the dollar on the international level, most of the currencies of the Arab countries, especially the oil states, linked to the dollar, it means that these countries will be exposed to losses may increase the losses in the event that the U.S. dollar due to a setback to U.S. debt.
He stressed that what is happening in the United States always reflected on the economies of the Arab world, because of globalization, which linked the East with the West, economically and socially, so the implications of the upcoming crisis of U.S. debt will be clear.
On the fate of Arab funds invested in U.S. Treasury bonds, he said, just going to see delays in payment, and in fact, the most important is that the United States, which reduced the interest rate on the dollar to one cent, this bond does not produce cover inflation, so there is a loss very important for countries that have these bonds that have returns of 2 to 3 per cent, and when the dollar drops by a large margin, it means that there is a big loss in the value of assets (bonds) by the value of the dollar.
He added: When the fall of wills Arab capital, it does not keep enough surplus to invest, and unfortunately, the Arab countries are not interested in investments of the Interior, but the idea of ​​expanding country cluster Gulf to include both Jordan and Morocco, will open the field to redraw the investment strategy in these countries to turn to Arab countries with high population density.
And lessons learned from the crisis, says just: the lesson that can benefit from the Arab world through this crisis is to try to create an Arab economic integration, and reduce the negative effects of globalization by focusing on internal economies of the Arab countries more foreign investment. Gulf states - for example - linked to the outside world much more than they relate to the rest of the economies of the Arab world, and here must be re-directing these investments to other Arab countries such as Egypt, Sudan, Morocco, and the rest of other countries in order to alleviate the impact of crises imported, and here I mean the economic and financial crisis in both Europe and the United States of America.
Ali said that the Arabs who estimated their investment of private and public dollars by $ 1.5 trillion facing a real problem, so they are required to diversify their investments to the border that allow them to do so. It may be difficult to re-diversify the investments of sovereign debt securities in the U.S., but was able to review the types of investment income for the new, as the candidate of the oil price to stay high with the potential decline in the dollar.