US markets to crash on tuesday ?

RadoX · 27 Jul 2011 at 22:32

Looks like there AAA credit rating is about to vanish. Insider trading ?

Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the United States will lose its AAA credit rating.

sauce: http://etfdailynews.com/2011/07/25/...eddon-trade-placed-against-the-united-states/

DBT85 · 27 Jul 2011 at 22:35

It won't happen yet. They'll sort out a deal before the deadline.

jp_bl_68 · 27 Jul 2011 at 22:36

I think insider trading is the least of our concerns if this mystery trader has called it right.

Time to start learning Mandarin, people.

jp_bl_68 · 27 Jul 2011 at 22:37

Todge said:
It won't happen yet. They'll sort out a deal before the deadline.

Yeah, people have been saying that for a while now. They're cutting it pretty fine.

RadoX · 27 Jul 2011 at 22:39

Todge said:
It won't happen yet. They'll sort out a deal before the deadline.

if there is a deal there AAA rating will still be lost.

[TW]Fox · 27 Jul 2011 at 22:39

They won't default or be downgraded. They'll extend the ceiling yet again.

squerble · 27 Jul 2011 at 22:42

Why do schools never actually teach you something to use in later life? I have absolutely no idea what's going on here, or what happens in politics at all. I don't even understand left/right wing. Damn my school!

jp_bl_68 · 27 Jul 2011 at 22:46

karlbbb said:
Why do schools never actually teach you something to use in later life? I have absolutely no idea what's going on here, or what happens in politics at all. I don't even understand left/right wing. Damn my school!

I had someone try to explain it to me last night. Basically, if the Yanks can't find a way to make a deal with themselves they'll officially run out of money on Tuesday. That means no money for welfare cheques, no money to pay back China, they may decide to devalue their currency to help ease their debts to foreign banks which will have a knock on effect on every other major economy in the world.

I think that's right. Not 100% sure though.

contracteur · 27 Jul 2011 at 22:49

Considering that the Dollar is the dominant world reserve currency wouldn't devaluing it cause disastrous issues for the rest of the world?

Judgeneo · 27 Jul 2011 at 22:53

contracteur said:
Considering that the Dollar is the dominant world reserve currency wouldn't devaluing it cause disastrous issues for the rest of the world?

yup, the consequences would be huge.

The world is collapsing around us

squerble · 27 Jul 2011 at 22:56

Moses said:
You're allowed to choose to read books... so start now?!

Since you're in a helpful mood, do you have any recommendations?

Jokester · 27 Jul 2011 at 23:00

They will raise the ceiling. No one will want to be held responsible for not only recking the world economy, but more importantly, trashing the US economy, there's an election coming up next year...

Twiggy1986 · 27 Jul 2011 at 23:01

i can see another global recession tbh

Judgeneo · 27 Jul 2011 at 23:01

Jokester said:
They will raise the ceiling. No one will want to be held responsible for not only recking the world economy, but more importantly, trashing the US economy, there's an election coming up next year...

True, but AAA is possibly still at risk

Smitho3 · 27 Jul 2011 at 23:03

karlbbb said:
Since you're in a helpful mood, do you have any recommendations?

Read this for a fairly good insight into the reasons behind the big market crash in 2007/08.

deusexlumina · 27 Jul 2011 at 23:03

i know this is really belittling the bigger issue here, but im off to america soon, so will it be a good time to get dollars next week?

Jokester · 27 Jul 2011 at 23:04

Judgeneo said:
True, but AAA is possibly still at risk

At the moment, the ratings agencies are only hinting at the possibility of them cutting the AAA rating if the ceiling isn't raised and as a result the US partially defaults because they can't refinance.

Dunks · 27 Jul 2011 at 23:05

http://blogs.telegraph.co.uk/financ.../the-kabuki-theatre-of-americas-debt-ceiling/

A nice article explaining why nothing *that* bad will happen if the US does lose its rating.

Example:

Yes, the US may be stripped of its AAA by Standard & Poor’s. A nice one-day story, but otherwise irrelevant. Global bond vigilantes are quite able to make their own judgement on the substantive default risk of the US. The rating agencies are out of their league on this one.

(By the way, the serial downgrades of Japan did not stop the yield on 10-year Japanese bonds falling to 0.5pc at one stage. What matters is whether investors really believe that they will be stiffed. In Japan they did not, and still do not.)

Clearly, the bond markets do not yet take the threat of US default seriously, though currency markets are less sanguine. I know this puzzles many in Europe, and angers some, but the cold reality is that yield are still just 0.4pc on 2-year US debt, and 3.02pc on 10-year bonds.

Martini1991 · 27 Jul 2011 at 23:05

Twiggy1986 said:
i can see another global recession tbh

That ship sailed a long time ago.

cm1179 · 27 Jul 2011 at 23:06

i've been investing my pension into chinese sources since 2002 this is good for me ..... right?