one of those

[solarbird]

This is one of the less worrysome rumours, that now has a good source:

S&P's Chambers: Pressure building on AAA rating
Wed Sep 17, 2008 12:19pm EDT
Reuters
By Walden Siew

NEW YORK (Reuters) - Pressure is building on the pristine "AAA" rating of the United States after a federal bailout of American International Group Inc, Standard & Poor's sovereign ratings committee chairman said on Wednesday.

The $85 billion bailout of AIG on Tuesday by the U.S. Federal Reserve "has weakened the fiscal profile of the United States," S&P's John Chambers told Reuters in an interview.

"Lack of a pro-active stance could have resulted in further financial stress and put pressure on the U.S. triple-A rating," Chambers said. "There's no God-given gift of a AAA rating, and the U.S. has to earn it like everyone else."

If treasuries lose AAA, the entire game is over. Meanwhile, here's more on how the Fed is running out of money, and raising more through emergency auctions. The last few months, those have mostly - overwhelmingly - been sales to sovereign wealth funds and similar foreign-governmental interests. Is this a good idea, and is it a stable situation?

also: TED to 304. Not tasty.

Comments

[elfs.livejournal.com]

Wow. Wow. If I understand this right and the Treasury's own rating drops below AAA, international incentives to borrow money against the Treasury's anticipated worth will drop like a rock, right? The US will have to start servicing its debt with internally generated revenues-- taxes-- or default. Have I got that right?

Holy goddamn resurrected Horus on a popsicle stick.

[solarbird]

It'll get a lot more expensive to do that financing, whoever ends up lending the money. A few points, at least. Now check the percentage of the US budget which is debt finance.

[silussa.livejournal.com]

Okay, the really basic summaries:

o There aren't going to be any more bailouts because, as you already said, if Treasuries lose their AAA status, it's game over.
o There's not going to be any major tax money giveaways, by EITHER candidate, for the same reason
o To shore up support for that rating, the Government is going to have to raise taxes going into a recession. Something last done in significant scale in 1930 or so, the effects of which have already been noted in the history books.

In short, oh *****.