Remember when the US was at risk of losing its coveted AAA rating? That was when times were actually good, and we had a couple trillion dollars less in debt. HA! We certainly called the ratings agencies’ bluff… didn’t we?
Japan’s loss of AAA rating (via Naked Capitalism) — The link chain passes through Zero Hedge, so I don’t know how I missed this. Japan isn’t heavily dependent on foreigners to fund its deficits, so the impact of this will be fairly small for Japan, but it should be viewed as a shot across the bow of the US.
U.K. May Lose AAA Rating at S&P as Finances Weaken — Revision: this should be viewed as a shot across the bow of the US. We can have some faith that they’ll downgrade the UK before they downgrade the US.
The UK already failed a gilt auction earlier this year. The US has yet to have that kind of problem. Fortunately, this is not going to play out quickly. This may be the only crisis where time is on our side. I strongly believe that the markets will reject treasuries and raise rates well before the ratings agencies actually issue downgrades.
