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Why the downgrade is important

 
Eponymous Coward
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User ID: 1495558
United States
08/05/2011 11:57 PM
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Why the downgrade is important
I just got off of the plane and I'm seeing all of this coverage about the debt downgrade. All of the msm coverage is missing the point. I will try to keep this simple:

1. US Treasuries are always considered the bonds with no risk and every financial calculation that most investors use to compare their investment to uses the them as a measure of what a perfect no risk security is, Now that we don't have AAA status, there is no telling how people will change their evaluation of asset values.

2. Treasuries are the basis for a lot of collateral. This collateral will need to be re-evaluated. MONDAY MORNING THERE ARE GOING TO BE A LOT OF CALLS FOR MORE COLLATERAL AND ALOT OF MARGIN CALLS. ALOT OF PEOPLE ARE GOING TO NEED CASH.

I don't know whether the shit is going to hit the fan, but it very well might.

If you havent already prepped, get some cash and some staples. This may take a few days to shake out next week.

No doubt the treasury and the fed are working to figure out an action plan by Monday. I would still take all necessary precautions.

THIS HAS ONLY JUST BEGUN!!!!!!
Anonymous Coward
User ID: 1494624
United States
08/06/2011 02:41 AM
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Re: Why the downgrade is important
If this isn't a wake up call for us I don't know what is.