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.

Countries' reserves of U.S. bonds 07/08/2011

Countries' reserves of U.S. bonds 07/08/2011

Became the discussions the U.S. Congress between the Republican Party and the Democratic Party on the roof of the public debt and federal, which reached its limits and in the case of no agreement the members of the U.S. Congress to increase those limits and ceilings of the current levels, which amounts up to $ 14.3 trillion U.S. economy of up to 14.7 trillion U.S. $ a rate of more than 97% of gross U.S. total U.S. Gross Domestic Product (GDP) in spite of the majority of countries do not reach that figure by more than 60% of the gross domestic product and by deficit should not exceed 15%, compared with more than 35% in United States of America.
The data and financial reports issued by the research centers and global studies Mrjara including The Treasury International Capital (TIC) as the end of May this year 2011 and issued by the Department of Treasury Department of the Treasury / Federal Reserve Board July 18, 2011, which showed that over than 4.5 trillion U.S. dollars invested only in bonds, Treasury Bonds & Notes (TB's) and Treasury Bills Treasury Bills (TBL's) Department of Treasury amounted to only the five largest of these investments and in the first place was China's investment (without the addition of Investment of Hong Kong), more than 1.2 trillion dollars as a percentage of 25.7% and if we add the share of investments of Hong Kong, amounting to $ 122 billion U.S. of the combined limits of 1.33 trillion U.S. dollars at a rate of 28.4% and Japan more than $ 912 billion U.S. percentage of 20.2% and the United Kingdom more than 346 billion U.S. as a percentage of 7.7% and Brazil more than 211 billion U.S. as a percentage of 4.67% and Taiwan more than 153 billion U.S. as a percentage of 3.4%. As for the Arab States Vtvid figures are inaccurate and Almskhalsh reports and financial studies and research that they amount to more than U.S. $ 220 billion, taking into account that all those investments are government exclusively belonging to the central banks in those countries which maintain the majority of their currency reserves in U.S. dollar through the purchase of such bonds and treasury bills of America, issued by the Treasury Department of the American government and with the same method and the way in which those banks, the central government to keep the reserves of other currencies including the euro, for example, through the purchase of Treasury bonds and notes issued by European and European Central Bank.
This is useful to mention that these bonds and treasury bills of America is not only issued by the U.S. government there are many international investments in general and Arabic in particular, through the private sector and semi-government public, and especially companies and investment funds of sovereign and governmental Arab and Gulf countries in particular are expected to reach total investments of governments, companies and investment funds, banks and Arab institutions in the bills and U.S. Treasury bonds by more than 390 billion U.S. dollars, this in addition to investing in stocks and bonds issued by U.S. companies, estimated at more than 630 billion dollars only in the United States of America in U.S. dollars, in addition to investments in the countries, companies and financial markets, the majority of investments of such countries, companies and markets in the United States of America.
Certainly the affected and the impact of sovereign debt crisis of America will lead to the exposure of the U.S. economy to the risks and problems and pitfalls of many long-present and future, and especially the loss and the weakness of financial confidence and investment that the economy and thus also lead to the establishment of agencies and bodies, international credit rating to reduce the credit rating of the economy in relation to the ability to meet the obligation to pay debt and international financial obligations also means difficult and inevitably the ability of the United States to issue more bonds and Treasury Bills U.S. and access to loan finance and banking, but in the event enable them to solve those problems and the ability to build confidence and return to investors, especially central banks and investment companies insurance.
Sure that any settlement solutions to this crisis will lead to higher prices of bank interest on the U.S. dollar in order to lead to the return of the investment in and through them, do not but would also increase the interest rates on new issues of treasury bills and U.S. bonds in order to lead to attracting the attention of investors and investment banks, central, and insurance companies.
Sure that those problems and obstacles will lead to a restructuring of the map of the international economy and even maps and investment policies and management of financial reserves of sovereign and private until a deal Republicans and Democrats in spite of that, certainly, whether agreed or not agreed American politicians on the roof of Almdioana the U.S. will start all the countries, companies and banks the central government and private re-building and study the composition and the planning and organization of their financial reserves and investment from all directions and centers.
The financial reports issued by the Treasury Department that the U.S. government more than 60% of the total financial debt to the central government back to the U.S. federal investors and central banks and government and private institutions, companies and regional and international insurance.
There are many discussions and studies, which suggests that the U.S. debt is much more than $ 14.3 trillion U.S., if we take into account the plan of financial support, which started with December of 2007 to date, which the Bank has the U.S. Federal Reserve to offer more from 16.1 trillion U.S. dollars and debts of institutions Mortgage American Freddie Mac and technicians Mae (Fannie Mae and Freddie Mac) that led to the ownership of the federal government continues to reach more than 5 trillion U.S. dollars in addition to more than $ 62 trillion U.S. Total liabilities and the amounts committed to be paid to social insurance funds and health insurance in the U.S. United States and the private Bmoatunaian Americans.
As is known to many analysts and Almracbeyen that the first plan and program audit of the books of the U.S. Federal Reserve Bank, which came from a strict application by the Republican Party in the American self by the U.S. Republican senator from Texas, Ron Paul Rep. Ron Paul (R.-Tex.) Have been completed in the last week.
The disagreement between the two teams is through the understanding of how to finance large deficits and growing every day, which asks which members of the Republican Party should be to increase taxes and reduce costs and who sees the Democratic Party is difficult to implement in the current period for reasons related to the global financial crisis and global recession.
Does not even say analysts and international economists in an attempt to give room for flexible management of the U.S. economy and control to manage the massive deficits and try reducing it and get out of this dilemma that he must be on the U.S. administration that the reduction of government spending or increase revenues from federal taxes up to U.S. $ 20 trillion in the next ten years 2011-2020
The expected impact on management of financial reserves of the countries and investment funds
Since that agreement has been signed and announced on Monday in the final hours between members of Congress from Republicans and Democrats on the increased level of public debt, provided the start and during the next ten years to reduce public debt levels of new side-by-side it was agreed to reduce the size of government spending by not our child and what the impact of rapid and immediate on the performance of financial markets for fear of a new economic recession and falling in the financial and economic activities with the fear of high rates of job search to new levels.
After the agreement immediately, the Ministry of the Treasury to increase the total U.S. public debt Total Debt up to 238 billion U.S. dollars in the same day to beyond the barrier of 100 percent for the first time in 30 years (already surpassed 100 percent of GDP, years 1947 and 1981) GDP Gross Domestic Product (GDP) of the United States for the payment of the benefits of bonds and treasury bills that mature in the U.S. that day, after the U.S. Senate approved a deal raising the debt ceiling so that the American state of pay and service debt.
In this large percentage join the United States of America to the group of countries that goes beyond the public debt, total gross internal and which, according to the International Monetary Fund Japan (229%) and Greece (152%) and Jamaica (137%) and Lebanon (134%) and Italy (120%) and Ireland ( 114%) and Iceland (103%).
Knowing that the debt ratio of the GDP of the United States reached low levels in the past, most recently in 2007, which reached up to 65 percent before rising high increase and unprecedented result of the economic downturn and the global financial crisis in 2008, which has suffered and still suffer from the majority of industrialized countries and developed countries.
This will be levels of public debt, the new U.S. up 14.7 trillion U.S. dollars, up from 14.3 trillion U.S. dollars and can be increased by the new agreement between the members of the U.S. Congress $ 1.5 trillion U.S. dollars additional if the above administration before the end of the year 2011 plan and procedures for new and convincing to reduce the deficit growing or developing an automatic mechanism in the event of failure to reach consensus to reduce the deficit.
Definitely that the high levels of U.S. debt and increasing deficit figures achieved in the U.S. budget on a yearly basis was and remains as a result of the U.S. administration released the U.S. dollar with gold in 1971 (during the administration of U.S. President Nixon), which gave the U.S. dollar liberal and thus also of liberation and the U.S. Treasury Department from any restrictions and therefore release all the economies of the modern world to provide cover for any legal tender for any state and territory, and thus the disappearance and the disappearance of any restrictions and regulations and the laws of international and regional financial to control the issuance of currency and linked to indicators of financial and economic development of any country, region and connect them with the levels of money supply and GDP levels and levels of public deficit.
The management of U.S. public debt and the U.S. economy during the past ten years have led to many of the indicators and the vocabulary of financial and economic well-known and easy to interpret so far, how can we understand that the global economy as a whole suffers from a huge financial crisis and unprecedented at all, and significantly reduce spending and austerity of a severe and simultaneously there is inflation in prices and a sharp decline in interest rates.
Everyone with the knowledge that any economic downturn necessarily lead to a very low and constant prices and goods and thus very weak exchange rates in general is not a currency, in particular due to lower demand for all products and goods. A
Zn certainly is a continuation of the U.S. administration to support its companies and their products, goods and services through the expansion of borrowing the global and individual countries by continuing to issue and print the U.S. dollar and the time the same issue more bonds and treasury bills of America and on a weekly basis are purchased from other countries and central banks, commercial and sovereign funds and the pension of a the major industrialized nations such as China, Japan, Taiwan, Russia and Brazil, as we pointed out last week, reaching the top five countries investing those versions came first in China (without the addition of Hong Kong), more than 1.2 trillion dollars as a percentage of (25.7%), and if we add the proportion of Hong Kong, amounting to $ 122 billion U.S. the figure is the combined limits of 1.33 trillion U.S. dollars at a rate of (28.4%) and Japan more than $ 912 billion U.S. as a percentage of (20.2%) and the United Kingdom more than 346 billion U.S. by a percentage amount (7.7%), Brazil more of 211 billion U.S. as a percentage of (4.67%) and Taiwan more than 153 billion U.S. by a percentage amount (3.4%).
So that the continued over-issuance of those bonds and notes of America and the marketing of these countries, funds and commercial banks and central led to a stop and an inability to pay and thus the beginning of that creditor countries to the U.S. Treasury Department to defend the United States of America and defense of the U.S. dollar, which means indirectly defends investments have and prevent a sharp decline of the U.S. dollar and prevent from the failure to reduce their credit to historically unprecedented levels.
The U.S. dollar is the currency of international trade for more than 70 percent, the majority and most of the contracts of world trade is priced in and push through and by the U.S. dollar is the currency of trade and the global settlement and all the world economies is linked, directly and indirectly, the U.S. currency is known as interest on the U.S. dollar and the levels of U.S. debt , not for political reasons but for reasons that those states and territories do not have a suitable alternative, with the world that the U.S. administration also does not suit a strong dollar, weakening of the trade capacity and export to countries such as the competition of the European Union, China and Japan.
Certainly the weak dollar means the capacity of major export companies and factories of America, which means more jobs and reduce social benefits, financial and therefore economic growth required to reduce government spending and reduce the gaps deficit achieved in the general budget of the U.S. and try to achieve the surplus and the debt and public debt and I think this is seeking to economists and U.S. politicians in recent times.
The rates of job search of America and reached unprecedented levels at the end of June of this year 2011 increased by 9.2 percent, up from 8.8 per cent in the month of March of the same in 2011, the low rates of job search and that prevailed in 2007, amounting to 4.6 percent.
The politicians and economists now seek to reduce the rates of job search growing for different reasons for them in terms of the desire of Democrats to win back the elections for the American Presidency in 2012 As for the economists is to try to improve rates of economic and thus improve the rates of the confidence of investors and consumers in the U.S. community agents.
Accordingly, the fact that Congress and the U.S. House of Representatives approving an increase in the debt ceiling the American public and the agreement to submit a plan before the end of this year to reduce spending led to a mad year in the financial markets and commodity markets and prices fell in stocks and commodities to record highs, which is the longest and toughest time series of losses (since 2008 ), especially in the markets of oil and metals as a result of anxiety in global financial markets, the foundation of the decline in global demand in general and especially in the U.S. for oil due to the fear of seeing more of the slowdown in the movement of the U.S. economy as a result of reduced government spending.
This has seen the S & P S & P, which tracks the performance of twenty-four primary commodity heading for a big drop to achieve a weekly loss of 6.7 percent which is the worst since the beginning of May 2011.
At the same time it has seen decades of U.S. crude oil fell sharply by 5.8 percent, with the end of trading last Thursday, before the decline to continue also in Friday trading down to low levels of losses in excess of 3.5 percent and approach the level of 83.24 dollars per barrel.
It is certainly too early to judge the course of things the world is sure that there is a state of anticipation and caution for the U.S. administration to deal with both houses of Congress and the U.S. House of Representatives and its implications for the global economy and the strong reaction and it is expected