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Some are questioning whether this was a manufactured crisis.
Congress raised the debt ceiling <span style="font-weight: bold">17 times</span> during Ronald Reagan's term, 5 times during George H.W. Bush's term, 4 times under Bill Clinton and 7 times during George W. Bush's term.
Obama tries to raise it once and suddenly he is the Tar Baby.
So does the "debt ceiling crisis" and the "credit downgrade" really add up to the media template that is out there now ? Or is the reality somewhat different ?
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">"....Thursday's 512-point selloff could have been triggered by early knowledge of the downgrade. There's no way to prove this, but think about it: There was no big news on Thursday. No banks failed. No hedge funds collapsed. No countries defaulted. If anything, Thursday brought a spate of earnings reports that should push corporate profits to an all-time high this quarter."</div></div>
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">"The real threat from the downgrade is a potential rise in interest rates, which could slow the economy and swell budget deficits. But.....this is no sure thing. <span style="font-weight: bold">Japan's interest rates fell after it lost its AAA credit rating.</span> JPMorgan Chase once did a study showing the effect on interest rates after a group of countries were stripped of their AAA rating. One week out, rates had hardly budged. On average, countries with AA credit pay more to borrow than those with AAA ratings do, but the difference is typically already reflected before a downgrade hits. This tendency bodes well for Treasuries, and it hits on a point that economists have been making lately: The Treasury market is so big, and there are so few alternatives, that the downgrade might just mean that AA becomes the new AAA."</div></div>
Congress raised the debt ceiling <span style="font-weight: bold">17 times</span> during Ronald Reagan's term, 5 times during George H.W. Bush's term, 4 times under Bill Clinton and 7 times during George W. Bush's term.
Obama tries to raise it once and suddenly he is the Tar Baby.
So does the "debt ceiling crisis" and the "credit downgrade" really add up to the media template that is out there now ? Or is the reality somewhat different ?
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">"....Thursday's 512-point selloff could have been triggered by early knowledge of the downgrade. There's no way to prove this, but think about it: There was no big news on Thursday. No banks failed. No hedge funds collapsed. No countries defaulted. If anything, Thursday brought a spate of earnings reports that should push corporate profits to an all-time high this quarter."</div></div>
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">"The real threat from the downgrade is a potential rise in interest rates, which could slow the economy and swell budget deficits. But.....this is no sure thing. <span style="font-weight: bold">Japan's interest rates fell after it lost its AAA credit rating.</span> JPMorgan Chase once did a study showing the effect on interest rates after a group of countries were stripped of their AAA rating. One week out, rates had hardly budged. On average, countries with AA credit pay more to borrow than those with AAA ratings do, but the difference is typically already reflected before a downgrade hits. This tendency bodes well for Treasuries, and it hits on a point that economists have been making lately: The Treasury market is so big, and there are so few alternatives, that the downgrade might just mean that AA becomes the new AAA."</div></div>
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