Day of reckoning looms for the U.S. dollar

[bsrsharma]

The U.S. dollar’s day of reckoning may be inching closer as its status as a safe-haven currency fades with every uptick in stocks and commodities and its potential risks – debt and inflation – are brought under a harsher spotlight….

http://www.financialpost.com/news-sectors/story.html?id=1612964

The part I can’t understand is this:

“Garnering attention is the risk the United States could lose its triple-A sovereign credit rating, which reflects the chance of the borrower defaulting on its debt.”

Can something like what is happening in California happen for US? i.e. Taxpayers simply not interested in paying back treasury obligations through taxation?

[CA renter]

If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.

We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.

Disclosure: long Swiss Treasuries (who are basically in the same boat)

[CA renter]

If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.

We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.

Disclosure: long Swiss Treasuries (who are basically in the same boat)

[CA renter]

If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.

We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.

Disclosure: long Swiss Treasuries (who are basically in the same boat)

[CA renter]

If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.

We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.

Disclosure: long Swiss Treasuries (who are basically in the same boat)

[CA renter]

If the U.S. loses its AAA credit rating, it (technically) means the govt will have to pay higher rates in order to borrow (sell Treasuries). It means the U.S. has a higher risk of default than another country that is AAA-rated.

We’ve been hearing rumors about this for awhile, so nobody really knows if anything really comes to pass. We’ve pretty much convinced many other countries (most who matter) to do the same thing via quantitative and qualitative easing. There seems to be some resistance now to go further, but again, it remains to be seen what happens outside of the rhetoric.

Disclosure: long Swiss Treasuries (who are basically in the same boat)

[bsrsharma]

China Grows More Picky About Debt

“..China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries,..”

[bsrsharma]

China Grows More Picky About Debt

“..China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries,..”

[bsrsharma]

China Grows More Picky About Debt

“..China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries,..”

[bsrsharma]

China Grows More Picky About Debt

“..China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries,..”

[bsrsharma]

China Grows More Picky About Debt

“..China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries,..”

[peterb]

Wouldnt be too quick to call this a recovery just yet. Another hard dive in the markets and the US$ will probably rise strongly. All currencies are abused at this point in time. If anything, I would think gold will emerge more strongly over the next few years. But world commerce still trades in US$. This will probably not change when fear and risk aversion re-enter the markets.

[peterb]

Wouldnt be too quick to call this a recovery just yet. Another hard dive in the markets and the US$ will probably rise strongly. All currencies are abused at this point in time. If anything, I would think gold will emerge more strongly over the next few years. But world commerce still trades in US$. This will probably not change when fear and risk aversion re-enter the markets.

[peterb]

Wouldnt be too quick to call this a recovery just yet. Another hard dive in the markets and the US$ will probably rise strongly. All currencies are abused at this point in time. If anything, I would think gold will emerge more strongly over the next few years. But world commerce still trades in US$. This will probably not change when fear and risk aversion re-enter the markets.

[peterb]

Wouldnt be too quick to call this a recovery just yet. Another hard dive in the markets and the US$ will probably rise strongly. All currencies are abused at this point in time. If anything, I would think gold will emerge more strongly over the next few years. But world commerce still trades in US$. This will probably not change when fear and risk aversion re-enter the markets.

[Author]

Posts