Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
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U.S. Ratings Downgrade by Fitch
August 2, 2023
I received the follow email because of my position on the Investment Advisory committee in the Villages. "Fitch Ratings (Fitch) downgraded its long-term ratings on the United States of America late yesterday, following through on the Ratings Watch Negative assigned on May 25. In its press release, Fitch cited an expected fiscal deterioration over the next three years, the high and increasing government debt burden, and an erosion in governance standards relative to its “AAA”-rated peers over the last 20 years that has resulted in recurring debt limit standoffs and last-minute resolutions. Fitch also noted the complex federal budgeting process and the government’s lack of a medium-term fiscal framework. We continue to closely monitor this developing situation and its market impact. Should you have any questions, please reach out to your PFMAM client service professional." |
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#2
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Last edited by RPDaly; 08-12-2023 at 06:18 AM. |
#3
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Buffett says non event. Trust him more than a ratings agency
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#4
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The USA doesn't deserve the top rating, as compared to the other countries with the top rating. The disclosure is just another legal requirement of information disclosure.
However, most domestic investment fund requirements don't have any rating requirements for the US govt debt. Its considered an asset class by itself. . . source: bloomberg guests and interviewees BUT this rating is significant for non domestic investors investing around the globe. But Fitch is NOT WRONG. . . and the US can get into an issue if they continue at the rate they are going. . |
#5
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Why am I not surprised?
__________________
"No one is more hated than he who speaks the truth." Plato “To argue with a person who has renounced the use of reason is like administering medicine to the dead.” Thomas Paine |
#6
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Quote:
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#7
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People have the government they deserve
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#8
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# 1 spending is Social Security
#2 is medicare. . . but its not the spending, its the funding from payrolls which need to be increased. you can't expect a rate from the 70s with an average life expectancy much lass than today, to pay benefits for the increase in the life expectancy of today. . There are many spending and funding ways to keep these and to reduce fraud but it doesn't garner votes amongst the large working class population so good luck to us! |
#9
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#10
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It's scary, but consider this -- every thing you own is tied to that rating. If US bonds ever became worthless, everything you have that you can't barter would also become worthless. So what's the point? The government's rating can never be less than "AAA" compared to every other investment, regardless of how close to the edge we dangle.
So what are you going to do? Invest in English bonds? How does that help, unless you're in England with your English bonds? Because if they're held in a US brokerage when it goes under, along with the SIPC, you're never going to be able redeem them! I'm glad that somebody occasionally calls "BS" on the FED that seems to be determined to finance our destruction with fake money, but they downgraded Treasuries a few years ago, when the national debt was a fraction of what it is today. Did it fix anything? |
#11
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Look on the bright side. If the government defaults on their bonds, you could place a lien on assets. If you "lose" enough, you could own something like the Whitehouse or Grand Canyon
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#12
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I have a brokerage account where the bulk of my life savings is in the form of imaginary money, backed by nothing more than the belief that somebody will accept it someday, which is loaned to my bankrupt government that printed it for a return less than the rate that the same government is printing new imaginary money, and yet that loan is rated to be the safest investment in the wealthiest country in the world -- but slightly less safe than it was yesterday. |
#13
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What scared Fitch was the willingness of members of Congress to refuse to raise the debt limit so the country could pay for debts legally incurred. Their brinksmanship had most of the world-wide business community on edge and had serious effects on the market. This is Fitch’s way of telling Congress to stop doing it and do the right thing, well in advance of when payments are due. Are members of the House proud of doing this? They are costing investors more money than they may possibly have saved with their disgusting tricks. |
#14
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Meaning that the funding of 100%(+) to GDP with the debt ceiling requirements in Congress gets to be political brinkmanship more often than not. I believe that the entire debt which funds all the different parts of the government, ie, the administration as well as the outlays, is all lumped together into a single evaluation point. Personally, my opinion is that the original debt raise increase from about $700 B which then was increased to about 50% more to $1T by the Treasury, put Fitch over the edge on the downgrade which they had been working on for months. The US is getting too big to manage effectively, as well as there have been some very dumb (imho) decisions by the Supreme Court and Congress. . |
#15
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No, we are already there.
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Closed Thread |
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