us debt rating aa+ same as japan

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    Hey Guys

    And here is what I believe is the situation with the US moving from AAA to AA+ rated debt and why I think now is the time to continue to buyshares!!

    S&P rerated the US Govt from AAA to AA+ on the weekend.

    The media will jump all over this and say that it is disastrous and a calamity.

    In fact there are less than a dozen countries in the world with AAA rating, Australia, Switzerland, NZ, Germany, Norway etc are part of this exclusive group.

    US now joins Japan, that has been AA rated country for 12 years, this AA rating hasn't been a devastating event for them or other who are rated AA. In reality what is supposed to happen when they go to the bond markets, the bond markets will require them to pay a higher interest rate 0.25% than they did in the past. If we use Japan as an example, their interest rates are almost zero, even with a AA rating, their economy is not growing consistently fast enough to increase the demand for funds to a level that the AA to warrant this .25% interest rate difference. The same will be the case for the USA.

    Even China with their $3.4Trillion in foreign exchange reserves only has a credit rating of AA- according to these ratings agencies.

    Some of the big Super and Hedge Funds in the US and elsewhere that buy US Treasuries will have to amend their investment parameters which in the past didnt allow them to buy into any bond with less than a AAA rating to allow them to buy AA rated US Treasuries.

    The other thing to remember is all the other ratings agencies still rate the US as AAA, it is only Standard and Poors that dropped the rating to AA.

    So we will see more volatility because of this. In 6-8 weeks the media will start saying that it wasnt as bad we first thought and the market adjusted to these changes and together with QEIII will lift Wall St.

    Cheers Nectar
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