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Old 12-22-2011, 09:24 AM   #1
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Fitch Again Warns US Debt Burden Threatens AAA Rating

http://www.cnbc.com/id/45761637

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"The high and rising federal and general government debt burden is not consistent with the U.S. retaining its 'AAA' status despite its other fundamental sovereign credit strengths," the ratings agency said.
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Old 12-22-2011, 09:55 AM   #2
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ZH pointed out that we did just cross the 100% debt/gdp ratio the other day, even without considering unfunded mandates. Something's gotta give, but so far this has been like watching grass grow...
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Old 12-22-2011, 10:09 AM   #3
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Go ahead and downgrade already. We deserve it.
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Old 12-22-2011, 10:24 AM   #4
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The loss of AAA ratings by Fitch, et. al. in addition to the unilateral downgrade by S&P a while back, will force financial institutions to accept/recognize the loss of AAA status. This will in turn affect a lot of pension and hedge funds that require investments in AAA rated vehicles - causing them to dump Treasuries.
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Old 12-22-2011, 11:08 AM   #5
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Originally Posted by PMBug View Post:
The loss of AAA ratings by Fitch, et. al. in addition to the unilateral downgrade by S&P a while back, will force financial institutions to accept/recognize the loss of AAA status. This will in turn affect a lot of pension and hedge funds that require investments in AAA rated vehicles - causing them to dump Treasuries.
Pensions and funds that require AAA ratings are going to start running out of assets they can own. I'm not really sure what will happen once treasuries start falling. The market could get pretty crazy pretty fast.

Unless someone else steps up to the plate and downgrades ahead of the election, Fitch is giving the US one year to get ahead of this.
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Old 12-22-2011, 11:21 AM   #6
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Originally Posted by dereksatkinson View Post:
Pensions and funds that require AAA ratings are going to start running out of assets they can own. I'm not really sure what will happen once treasuries start falling. The market could get pretty crazy pretty fast.

Unless someone else steps up to the plate and downgrades ahead of the election, Fitch is giving the US one year to get ahead of this.
Treasuries have been in a bull market since 1981. This long term cycle is coming to an end anyway.
Richard Homer´s book "A history of interest rates" describes this brilliantly. Bonds tend to have ~ 30 year bull/bear cycles. It´s time for a bear market in bonds.
I hold a small 3x short position in 10 years through an ETF. I don´t expect a crash to happen tomorrow, but once it starts all hell will breake loose.
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Old 12-22-2011, 11:56 AM   #7
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Originally Posted by swissaustrian View Post:
I don´t expect a crash to happen tomorrow, but once it starts all hell will breake loose.
The fact that treasuries are able to be sold with yields this lows baffles me. I guess i'm just crazy for not wanting to lend our government money at negative real interest rates.
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