Saturday, August 6, 2011

Markets won't crash, says The Economist

"... Standard & Poor’s decision to downgrade America’s credit rating on Friday is momentous, but not, I suspect, for the reasons most people will cite. Many worried that interest rates would skyrocket and the markets sell off. This seems unlikely. The news won’t be a surprise and S&P was kind enough to dampen any impact by waiting until after the markets closed. There are very few investors who will be compelled to sell Treasury debt because it’s rated AA+ instead of AAA. Banks will not have to hold more capital against their Treasury holdings, regulators confirmed...."
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