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Egan-Jones downgrades its U.S. debt rating to AA- from AA. "Some market observers contend that a...

  • Friday, September 14, 2012, 3:27 PM ET
    Egan-Jones downgrades its U.S. debt rating to AA- from AA. "Some market observers contend that a country issuing debt in its own currency can never default since it can simply print," but Reinhart and Rogoff show 70 out of 320 defaults since 1800 have been on local currency public debt.
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This news story has 22 comments:

  • Who is Egan working for?
    14 Sep 2012, 03:32 PM Reply Like
  • Tom,

    Have you submitted your bank collateral blog post to SA?

    Ne'O
    14 Sep 2012, 03:48 PM Reply Like
  • Ne'O,

    I didn't submit it, just put it in as an instablog.

    I didn't put a lot of time into it, just a few comments based on a quick reading of the Bloomberg article that I linked to.

    If at some time in the future I develop something with more substance and original content directed at the big banks, I would plan to put it in as an article.
    14 Sep 2012, 03:58 PM Reply Like
  • Please do. I won't be the one to spot the next Black Swan event, but the collateralization tricks ranging from Euro debt tossed under the bedding of US subsidiaries to something like the banks as go between on junk collateral for large deriv instrument bets keep building a list of things I want to keep an eye upon.

    We're a small fund, and they give us infinitely more leverage than I can sanely use. We don't, but for every fund like us there are certainly two or three that do use the leverage.

    Ne'O
    14 Sep 2012, 04:09 PM Reply Like
  • I'm under the impression that Egan is a rating agency,
    but unlike the big 3,
    Egan doesn't take fees from the issuers that he rates,
    rather he gets his fees from investors willing to pay for them.

    Not crooked as hell like S&P and Moody.

    I haven't heard anything about him rating toxic mortgage stuff AAA
    If he did rate that stuff, I'd like to hear what rating, if any he did give.
    16 Sep 2012, 01:25 PM Reply Like
  • Themselves...and they are spot on
    14 Sep 2012, 03:38 PM Reply Like
  • Yes, Egan is the best of the ratings bunch.
    14 Sep 2012, 09:48 PM Reply Like
  • Egan Jones..yawn...
    14 Sep 2012, 03:39 PM Reply Like
  • Who cares if they're smaller than the other rating agencies if they produce good analysis. Thinking along those same lines I guess no one should listen to you bbro...
    14 Sep 2012, 04:01 PM Reply Like
  • Thank God for a MAN who says what he means and means what he says!
    Sean Egan is saying what needs to be said with regard to the total abdication of the moral and virtue that Bubble Blowin' Ben swore to uphold!

    Bernanke is no longer working for the best interests of the working man / woman who is being KILLED with his perverted policies!
    A downgrade might just jar him back into reality!

    Romney in a landslide!
    Rand Paul replaces Bubble blowin' Ben and
    Ron Paul replaces Tax Cheat Timmy!

    The republic does not stand much more of this debauchery.
    Our embassies worldwide are under attack and Obama and Clinton prove to the world their total lack of any adult leadership or comprehension of the magnitude of the problem!

    God help us!
    14 Sep 2012, 03:42 PM Reply Like
  • David Stockman was just interviewed by David Asman(who I am no big fan of) but a very worthy take on what has been perpetrated by this fed in the death of capitalism!
    Check it out on foxbuisness,
    go to their site shortly,
    it should be up soon!

    Bernanke is the biggest detriment to our economy, next to the Obummer foreign policy!
    14 Sep 2012, 04:26 PM Reply Like
  • The Black Swan could be Israel and Iran, and it might be sooner than we think. Just when everything looks like an easy play, that is when they turn.
    14 Sep 2012, 07:05 PM Reply Like
  • yawn
    14 Sep 2012, 07:57 PM Reply Like
  • obama refused to meet with netanyahu
    not a good move
    14 Sep 2012, 09:40 PM Reply Like
  • Yaaaaaaaaaaaaaaaawnnnnnn. WHO CARES?? Do track records matter at all anymore? Does anyone even remember that all these rating agencies gave AAA ratings to all the subprime MBSs?? No? Well, there is your reminder.

    Nothing to see here. Seriously, really nothing.
    15 Sep 2012, 12:26 AM Reply Like
  • Egan who?
    15 Sep 2012, 07:42 AM Reply Like
  • N'eO,

    Please, if you could explain " the collateralization tricks ranging from Euro debt tossed under the bedding of US subsidiaries to something like the banks as go between on junk collateral for large deriv instrument bets" - in layman's terms? Would greatly appreciate because this sounds most instructive.

    Regards, rs
    15 Sep 2012, 09:07 AM Reply Like
  • RS,

    I'm still looking for the specific article, as I cannot find the link I thought I'd saved. Should have copied it to my local drive. It was reporting on Deutsche Bank and certain activity with their (Teutonic Funds?), or other name referencing a Germanic mountain range.

    Ne'O
    17 Sep 2012, 09:23 AM Reply Like
  • Egan Jones downgraded the US!!! Panic on the streets!!! The world is ending!!!!


    Oh wait a moment....the malls are packed, people are spending, stocks are making new all time highs......


    When is the apocalypse starting? Hahahaaha....
    15 Sep 2012, 10:02 AM Reply Like
  • It was clear countries that are fiat currencies could theoretically always pay their debt via printing. In theory this is the reason there is an assumed 0% risk in bonds issued by them. It is also the reason why you downgrade them based upon their need to do this and the fear of currency devaluation. The fact the US must do this is definitely worth a downgrade.
    15 Sep 2012, 11:58 AM Reply Like
  • Absolutely. For me personally, a printing press may eliminate the default risk, but the risk remains in different form. For anyone investing beyond his national scope, currency value can only ever be measured by comparing its performance to other currencies. If a currency gets debased by the central bank, your bond may not have a default risk, but it certainly has an exchange rate risk.
    15 Sep 2012, 02:43 PM Reply Like
  • The issuers of securities, i.e., companies, special purpose entities, state and local governments, non-profit organizations, and national governments issuing debt-like securities (i.e., bonds) have to be evaluated just like everybody else. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued. That doesn't mean the system is perfect by any means but it certainly has it's purpose.
    16 Sep 2012, 03:41 AM Reply Like
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