[QUOTE]The UK has lost its top AAA credit rating for the first time since 1978 on expectations that growth will "remain sluggish over the next few years".
The ratings agency Moody's became the first to cut the UK from its highest rating, to Aa1.
Moody's said that the government's debt reduction programme faced significant "challenges" ahead.[/QUOTE]
[url]http://www.bbc.co.uk/news/business-21554311[/url]
Is that better or worse than the US
welcome to the world of the poor UK
[QUOTE=Trogdon;39682579]Is that better or worse than the US
welcome to the world of the poor UK[/QUOTE]
The US was also downgraded to AA from AAA.
[QUOTE=UziXxX;39682597]The US was also downgraded to AA from AAA.[/QUOTE]
I thought we were AA+
UK is Aa1
What do any of these mean
This may be of some use.
[url]http://en.wikipedia.org/wiki/Credit_rating[/url]
[url]http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating[/url]
[url]http://en.wikipedia.org/wiki/Sovereign_bonds[/url]
Aa1 is the Moody's equivalent of AA+.
Wow look at all the good that austerity is doing, it's literally doing so well banks were like "fuck this shit, their cuts are too good!" and downgraded our credit rating.
oh no the fuhrer doesn't like us as much anymore
[QUOTE=carcarcargo;39682703]Wow look at all the good that austerity is doing, it's literally doing so well banks were like "fuck this shit, their cuts are too good!" and downgraded our credit rating.[/QUOTE]
Except Moody's said that the UK will get the AAA rating back if it continues to cut spending.. and plus spending more money will just make things better right? :downs:
[QUOTE=butt2089;39682851]Except Moody's said that the UK will get the AAA rating back if it continues to cut spending.. and plus spending more money will just make things better right? :downs:[/QUOTE]
Yes, because if people actually had jobs they'd have money to spend and thus the government would get more tax, rather than having to pay unemployment benefits in which they actually lose money and gain nothing in return.
they should be raising taxes on those who can afford the taxes rather than cutting.
Not that i know much about this but isn't Moody's more reputable that the other 2 big credit rating agencies? Even the US government think S&P are full of shit and i don't know if Fitch does ratings for countries as a whole.
[QUOTE=carcarcargo;39682892]Yes, because if people actually had jobs they'd have money to spend and thus the government would get more tax, rather than having to pay unemployment benefits in which they actually lose money and gain nothing in return.
they should be raising taxes on those who can afford the taxes rather than cutting.[/QUOTE]
Are you genuinely telling me that your solution is to not bother cutting government spending and to just tax people more and give out worthless jobs with tax money?
The government could kick-start growth by allowing houses to be built, we haven't built so few houses since the 1920's and prices have rocketed as a result - you would get loads of people back into work and for what cost? By coupling that with reductions in pointless spending i.e wind farms and foreign aid as well as streamlining current services you would start to put deficit reversal into motion
i'm not an economist but credit rating agencies seem like a load of horseshit
[QUOTE=butt2089;39682970]Are you genuinely telling me that your solution is to not bother cutting government spending and to just tax people more and give out worthless jobs with tax money?
The government could kick-start growth by allowing houses to be built, we haven't built so few houses since the 1920's and prices have rocketed as a result - you would get loads of people back into work and for what cost? By coupling that with reductions in pointless spending i.e wind farms and foreign aid as well as streamlining current services you would start to put deficit reversal into motion[/QUOTE]
Yeah the police are totally worthless jobs, as are those working in the NHS.
Cut non essential services, but not the big ones they've cut so far and not as much since at some point we're going to have to start paying to fix it again.
The Daily Mail is going to throw a shitfit.
I'll see it soon enough, a bunch of my relatives are dumb enough to read it.
I would like to experience an economic boom one day compared to this.
So, uh, how did these [del]companies[/del] agencies come to have so much influence in regards to rating countries?
thanks cameron
[QUOTE=Sobotnik;39684092]thanks cameron[/QUOTE]
Because of your general political attitude I'm not actually sure if this is serious or not.
'Tis a sad day, indeed. Maybe if the UK govt cracks down on businesses like they did Starbucks who weren't paying any taxes, they can generate revenue without having to shake down everybody else. Or maybe they could renegotiate with the EU to not have to put so much money into it. Does anyone have the figures to how much of that money that London gives Brussels actually comes make at all to London?
[QUOTE=ijyt;39683439]So, uh, how did these [del]companies[/del] agencies come to have so much influence in regards to rating countries?[/QUOTE]
I'd imagine privilege and the amount of capital they dictate plays a big part
Osborne saw this coming, but didn't cut back on his austerity measures because he wants the government to remain 'credible'. Fuck that shit and admit you were wrong you cunt.
[img]http://s.hruhf.in/2013-02/2013-02-23_18-18-18.png[/img]
What on earth does SD mean?
Supreme Debt?
Sucks Dick?
[QUOTE=Coppermoss;39684390]'Tis a sad day, indeed. Maybe if the UK govt cracks down on businesses like they did Starbucks who weren't paying any taxes, they can generate revenue without having to shake down everybody else. Or maybe they could renegotiate with the EU to not have to put so much money into it. Does anyone have the figures to how much of that money that London gives Brussels actually comes make at all to London?[/QUOTE]
It would not be possible to get any more tax from Starbucks considering how they currently operate.
The tax avoidance involves buying coffee beans from a Swiss subsidiary where there is no tax to be paid on the purchase, the coffee beans are bought at an extortionate rate and therefore the UK company registers a loss or small profits each year therefore avoiding corporation tax.
Funnily enough, the most appealing part of the EU, the free trade area, is to blame with this one - or more to the point, a lack of tax co-operation between countries.
[QUOTE=Hruhf;39687145][img]http://s.hruhf.in/2013-02/2013-02-23_18-18-18.png[/img]
What on earth does SD mean?
Supreme Debt?
Sucks Dick?[/QUOTE]
It stands for Selective Default, which means that they can delay interest payments on certain parts of debt whilst continuing to pay off others - it prevents them from being consumed by a huge debt bill.
I don't blame cameron really, I blame companies outsourcing using cheap labour to produce goods. UK use to pump out goods and send them across the world, now that companies going to other countries means less jobs, less exporting, less tax income. So really if we could point the finger, aim it towards companies and less so at the people who want work but cant get it, you can point it at the people who just don't want to work as they are like leeches to the economy.
[QUOTE=Seriousshakey;39687245]I don't blame cameron really, I blame companies outsourcing using cheap labour to produce goods. UK use to pump out goods and send them across the world, now that companies going to other countries means less jobs, less exporting, less tax income. So really if we could point the finger, aim it towards companies and less so at the people who want work but cant get it, you can point it at the people who just don't want to work as they are like leeches to the economy.[/QUOTE]
Britain's industry is surprisingly robust and we have close links to powerhouse Germany, who year on year reports a trade-surplus.
What we need to do is connect more to Brazil, India and China. In Brazil, the UK is the #1 source of investment, with India we share heritage and language, and in China we have the link to affluent Hong Kong. The UK is in a great position, we just need to exploit it more and reach out.
Unfortunately though, the EU does not allow us to form trade relations or pacts with these countries - but with Germany increasingly on our side with regards to an ailing France, who knows - there might be a change to that?
Watch as this has absolutely no effect on bond yields a year down the road. People are just going to keep buying UK debt.
FYI for anyone who is curious, a country issues government bonds which can be bought by various people and institutions. A bond is basically a way of saying "gib moni plos i pay u bak later wif extra". This extra comes from a interest rate that the issuer of the bond sets, and is paid every year to the buyer of the bond. A country's credit rating is a reflection how how reliable this statement is (that is, whether they can really pay you back later). The more reliable they are, the lower the interest rate, and vice versa.
Typically a downgrade will mean bad news for the issuer of the bond, because they will have to pay higher interest rates to entice people to buy a supposedly riskier bond. But when it comes to government bonds from reliable economies such as the UK, it hardly matters because the risk of the UK defaulting on a bond is near zero. Hence, interest rates on the bonds are barely affected by such a downgrade. Furthermore, a downgrade from AAA to Aa1 is akin to scoring 99 or 98 on a test - most institutions treat them as the same thing.
In any case, there are three big players in the credit rating arena - Standard & Poor's, Moody's and Fitch's. Only Moody's has downgraded the UK's credit rating. The other two are keeping it at the top (for now, at least).
If you read through this whole post, congratulations! You now know a little more about global economics.
and the bond is based on the country's potential future GDP/labour productivity i.e. the perceived ability to pay the borrowed money back?
Isn't that like selling the output of workers before the work has actually been done in the hope (and predictions from previous years) that it will meet the level required to pay it back or, ideally, surpass it?
[QUOTE=Pepsi-cola;39682655]This may be of some use.
[url]http://en.wikipedia.org/wiki/Credit_rating[/url]
[url]http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating[/url]
[url]http://en.wikipedia.org/wiki/Sovereign_bonds[/url][/QUOTE]
Scandinavia stronk
[QUOTE=Headhumpy;39687628]Watch as this has absolutely no effect on bond yields a year down the road. People are just going to keep buying UK debt.
FYI for anyone who is curious, a country issues government bonds which can be bought by various people and institutions. A bond is basically a way of saying "gib moni plos i pay u bak later wif extra". This extra comes from a interest rate that the issuer of the bond sets, and is paid every year to the buyer of the bond. A country's credit rating is a reflection how how reliable this statement is (that is, whether they can really pay you back later). The more reliable they are, the lower the interest rate, and vice versa.
Typically a downgrade will mean bad news for the issuer of the bond, because they will have to pay higher interest rates to entice people to buy a supposedly riskier bond. But when it comes to government bonds from reliable economies such as the UK, it hardly matters because the risk of the UK defaulting on a bond is near zero. Hence, interest rates on the bonds are barely affected by such a downgrade. Furthermore, a downgrade from AAA to Aa1 is akin to scoring 99 or 98 on a test - most institutions treat them as the same thing.
In any case, there are three big players in the credit rating arena - Standard & Poor's, Moody's and Fitch's. Only Moody's has downgraded the UK's credit rating. The other two are keeping it at the top (for now, at least).
If you read through this whole post, congratulations! You now know a little more about global economics.[/QUOTE]
The credit rating of the countries government can and does influence the cost of borrowing for domestic businesses.
Maybe partially due to the C word. That all business hates 'confidence'
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