Irony Of US Rating Downgrade :-)

IF YOU POINT FINGER AT ME:-Tim Geithner US Treasury chief after the downgrade said S&P is showing a stunning lack of knowledge and they made a mistake of $ 2 trillion in calculation while arriving at US downgrade decision......By the way if you remember Tim is the same guy who made a mistake while filing his own income tax return couple of years back. WHO IS NEXT TO ME? : - After the down grade, let us see who is sitting next in line with US? OH my god!!! It is Spain!!!! Yes, US Credit Rating (AA+) is now just a notch above Spain (AA) who is on the verge of default and European Union is buying its bonds to save it from the default. RATE THE RATING AGENCY :a. Incidentally Spains rating is much better than China and India (the growth engines of global economy for last 5 years with better fiscal management )-It is one notch above Chinas rating (AA-) and whopping 7 notches above India whose rating is (BBB-) b. By the way Indias Rating (BBB-) is same as that of Iceland who was saved by EU from default few months back c. Spain and Italy two countries who are on verge of collapse have their debt better priced ( 10 year government bond 5.70 %) compared to that India ( 10 year yield at 8.30%) second largest growing economy in the world with 8.2% GDP growth and less than 5% fiscal deficit I DONOT WANT TO BE STRONG - US rating downgrade has affected Switzerland in a different way. Swiss Currency -Swiss Franc now considered to be one of the safest currencies has appreciated against dollar on Monday. The Swiss authorities have called an emergency meeting of its top officials to discuss to how to stem this flow and stop Swiss franc from appreciating which is affecting Swiss exporters badly. RICH IS GOING TO POOR FOR FINANCIAL HELP: - OK. Here you go. USA (AA+ borrower) with GDP of $ 15 Trillion is borrowing from china and Japan (GDP of about $ 4 Trillion) -both having rating one and two notches below USAs revised rating. By the way China the largest creditor (and savior ??) of US who is holding $ 1Trillon of US debt has rating 2 notches below that of USA. BLAME YOUR ECONOMICS PROFESSOR :-He taught you that a. IF THE RATING OF ANY COUNTRY OR COMPANY GETS DOWNGRADED ,THE YIELD (COST OF BORROWING) OF THAT COUNTRY/COMPANY GOES UP - US ten year bond yield further came down (yes Came down!) From 2.55 % to 2.45% after the downgrade. b. BANKS GIVE YOU RETURN ON YOUR DEPOSITS THEY PAY YOU INTERST TO KEEP DEPOSITS WITH THEM Yesterday, BNY Mellon said -it has seen such a large

increase in deposits over the last month that it will charge a 0.13 percent fee to clients with "extraordinary high deposit levels.
BETTER THAN YOU after the downgrade the Dollar appreciated (yes! you read it correctly) against its strongest rival currency -Euro (investors think European problem is more acute than US down Grade).

TASTE OF YOUR OWN MEDICINE! After the downgrade ,largest creditor of US China is advising /asking US authorities to clear this financial mess and make sure that they keep their financial house in order few months back it was US officials giving Chinese authorities advise on many of economic policies of china ( like unpegging of Chinese currency Yuan). THE COLD WAR IS REALLY OVER! -Russia (one time big enemy of US) was one of the first countries who came out in support of US government after the downgrade. Its top financial official said yesterday there will not any change in its investment in US treasuries . ALL THAT GLITERS IS INDEED GOLD: - Gold Prices are proving it to be very true. It reached new all-time high (again!)Today.

Author :- Sanjay Deshpande I, me, myworld Blog :- http://deshpandesanjay.wordpress.com/about/