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HomeBreaking News: S&P Downgrades United States
Posted by Larry Doyle on August 5th, 2011 7:55 PM |
The Wall Street Journal is reporting that Standard & Poors has just downgraded the credit rating of the United States from a AAA rating.
This is a HUUUUGE story. What do I see as the implications?
1. Short term lending markets will get tighter and activity will likely decline as the quality of what had been the highest quality collateral, US Treasury debt, is now downgraded.
These short term lending markets, also known as the repo market, are the liquidity in our financial markets’ engine. As the liquidity lessens and the cost of doing business increases, overall activity in the markets will be negatively impacted.
2. Other entities which had owned and used US Treasury debt for collateral purposes will be negatively impacted by the higher costs of holding lower quality debt. Other entities which were closely aligned with the US Treasury, such as Freddie and Fannie, will also be negatively impacted in terms of higher borrowing costs. (more…)
President Obama, “Are You In?”
Posted by Larry Doyle on May 25th, 2011 7:57 AM |
Information is everything.
Regular readers of Sense on Cents are well aware of my having written that statement on many an occasion. Those on Wall Street who gain early access to critical information have a decided advantage. Those in Washington who gain the upper hand in controlling the flow of information are also at a decided advantage.
As these realities become ever more prevalent, Americans and people worldwide are working harder and digging deeper to attain unbridled access to information in order to determine the truth and promote transparency. With major media outlets often failing us in these pursuits, where do we turn for this information? The internet.
Against this backdrop, I am not surprised to see political powers in Washington accept and embrace the reality of the power of the information superhighway and put an ‘eye in the sky’ in order to monitor the traffic. To what do I allude? (more…)
