9/11 to 31/11 Dollar is back in the Game

It was 9/11 when the US empire was shot in the knee, and was made to bend forward in pain. The financial world responded with awe and disdain. The markets collapsed and FED under Greenspan responded with great strike. The Incident followed with Bush's attack on Iraq under the false allegation and deceit of Chemical warfare. The Iraq war destabilised the US more than it helped. The dollar fell.The deficit soared and economy perplexed and succumbed in 2008.


President Obama took it with All the Big Promise than ever before. But the Dollar continued its weakness. Bernanke marshalling FED threw the money from the Helicopter on the terraces of the Big banks and some fell down on the wall street. Dollar weakened more.
Many doubted the validity of Dollar to remain ' Reserve Currency'. I.D R. were brought from the shelf of I.M.F. The Gold Rallied as if America was submerging in Pacific. Many took the shelter in other precious metals and China's Renminbi was seen the future of the world currency. The value lies in the perception.

The Failure of US government to sort out dead lock with opposition and its political weakness to rule the country, on its own terms saw the typical democratic impasse. The S& P down graded the US and its army of Merchant Bankers, funds and so on. Apparently, it was a scratch on the Surface.

The seizure and execution of Osama Bin Laden, the ouster and killing of die hard Libyan leader Col. Gaddafi. backed up the political and military might of US. Thus, Dollar got its physical support. The European economic crisis slammed on the face of Euro as an alternative currency, replacing dollar. and Thirdly, the exit from Iraq, will now further back up drain US exchequer.

From 9/11 to 31/11, Dollar has moved the cycle of weakness and withstood the doubters.

The beginning of this New Year dollar has re-established and enshrined to currency of this decade.

Standard and Poor's aiming to downgrade World and themselves..?

Standard & Poor's may downgrade the triple-A ratings of six European nations including Germany, according to the Financial Times in its online edition Monday. 


The ratings agency will review the triple-A ratings of Germany, France, the Netherlands, Austria, Finland, and Luxembourg, and lower them to a AA+ if reviewers are not convinced that European policymakers are making enough progress to justify the ratings, FT reported. 


S&P is expected to release its announcement of the review later Monday


It seems with this action there will be a time when every thing and all is degraded by Standard and Poor's will downgrade to the Sub prime category. Is it sensationalism, unrealism and Selling Fear. 
It seems there are many buyers of Fear now than Greed. 
What is Sold that is Made..! 

Standard and Poor's the Rating Importance---Video

Banco Santander shot by S & P

 Citing a grim outlook for Spain's economy, Standard & Poor's on Tuesday cut its view on 15 of the country's banks. Spain "faces dimming growth prospects in the near term," the ratings agency said while "real estate market activity remains depressed and turbulence in the capital markets has heightened." Further, "the correction of imbalances in Spain will continue negatively affecting the financial profiles of Spain's banks in the next 15 to 18 months." Among those downgraded was Banco Santander , which dropped to "'AA-" from "AA" and was assigned a negative outlook. Among the others also hit were Banco Bilbao Vizcaya Argentaria and Confederacion Espanola de Cajas de Ahorros.

Tech slowdown in last Half -2011

Global High-Tech Spending Likely To Slow In The Second Half Of 2011

Standard & Poor's Ratings Services expects that the current positive rating change bias in the global high-tech sector will continue to moderate, reflecting an anticipated slowdown in IT spending in the second half of the year, a weakening global economy, and ongoing M&A activity. However, given solid first-half results, our expectation for full-year global 2011 IT spending is still for moderate revenue growth across most high-tech subsectors. Semiconductor firms are likely to record the weakest full-year revenue performance, at flat to low-single-digit growth.

Economic Outlook

Standard & Poor's has revised its base-case 2011 and 2012 outlook for the U.S. high-technology sector to neutral to slightly negative, from slightly positive, based on the following fundamentals:

• Our current baseline forecast of 1.6% GDP growth this year in the U.S. is a downward revision from 2.6% and is just over half of last year's 3%, while prospects for the next two years are not much better than for 2011;
• Subdued consumer spending and constrained government budgets; and
• Global economic conditions that include moderating growth in the Asian economies and the growing risk of a slowdown in the U.S. and Europe.

Our industry outlook reflects an anticipated slowdown in IT spending in the second half of this year due to weakening global economic conditions. This follows a return to normalized growth earlier this year, after the sharp cyclical drop during 2009 and recovery in 2010.

Despite rapid expansion of certain end markets and solid operating results across the industry, there are numerous global economic headwinds, in our view, that could absorb some of the capacity established during the past seven quarters: still-high unemployment, U.S. automotive production that remains well below pre-2008 levels, tepid consumer spending, the European debt crisis, and pressure on government spending. Because many rated issuers have a cushion at current ratings, negative near-term rating actions are more likely to be the result of escalated M&A activity or leveraged recapitalizations rather than unfavorable operating trends. Nonetheless, ratings on speculative-grade tech credits may begin to be pressured if the U.S. economy deteriorates beyond the baseline forecast.

OIL/Euro Sink, rating firms leaked, FED's Twist

OIL and Euro sink at the close of the Quarter 


 The New York Federal Reserve Bank of New York said Friday that it would begin Treasury purchases and sales on Monday as part of the program dubbed "Operation Twist" announced by policy makers earlier this month. 
The Fed will buy long-term debt on Monday, Tuesday and Friday and inflation-linked debt on Wednesday. 
It will sell one-year debt on Thursday, the Fed said on its schedule posted on its web site














Rating Firms the Leaking Jar..?


In a report issued Friday on the performance of the big ratings firms, the Securities and Exchange Commission said that despite changes to their operations, it still "identified concerns" at all of them. Among the problems, the SEC said, are "apparent failures in some instances to follow ratings methodologies and procedures [and] to make timely and accurate disclosures. It also criticized the firms for not being able to "establish effective internal control structures for the rating process and to adequately manage conflicts of interest." SEC staff looked at 10 of the biggest operators in the industry, including Fitch, Moody's and Standard & Poor's.


US Economy in recession .


The U.S. economy is headed for a new recession that government intervention cannot prevent, the Economic Cycle Research Institute said Friday. "Cyclical weakness is spreading widely from economic indicator to indicator in telltale recessionary fashion," ECRI said in a published report. The ECRI's Weekly Leading Index (WLI) growth indicator, reported Friday, showed economic growth at negative 7.2% for the week ended Sept. 23, continuing a trend that began in August. U.S. economic strength has been declining since May, according to the WLI.

Fitch, S&P downgrade New Zealand's credit rating

New Zealand's credit rating has been downgraded by two of the three major ratings agencies amid increased global concern over high debt burdens in developed nations.

Fitch and Standard & Poor's on Friday downgraded New Zealand from an AA+ rating to AA.

In the past, New Zealand has enjoyed strong sovereign credit ratings due to relatively low levels of government borrowing that offset worries about the country's high private debt. But the ratings agencies have become less sanguine after an earthquake and weak economic growth strained the government's finances.

The agencies are taking a harder line on any form of debt in the wake of the global financial crisis. Countries such as Ireland, which was forced to bail out banks after the global recession, have demonstrated how private debt can easily become a problem for the government.

The downgrade weighed on the New Zealand dollar. It was trading late Friday at $0.7639, down from $0.77 the previous day. It was worth as much as $0.88 two months ago.

In its review, Fitch said New Zealand's high level of external debt is "an outlier" among comparable developed nations, a situation which is likely to continue given that the current account deficit is projected to increase. A current account deficit typically shows that a country is spending more than it earns and relying on borrowing to make up the gap.

Standard & Poor's cited increased spending by the government following February's earthquake that killed 181 people and devastated the center of Christchurch, New Zealand's second biggest city.

According to S&P, negative factors include the country's high levels of household and agricultural debt, its reliance on commodities for income, and an aging population.

"Rising savings will be an important component for keeping the country's current account deficit in check," said S&P analyst Kyran Curry.

New Zealand has a poor track record of personal savings, something that recent governments have attempted to address with a voluntary retirement contribution scheme called KiwiSaver. The latest downgrade will likely increase pressure on the government to make the scheme compulsory.

New Zealand's finance minister Bill English defended the country's economic performance. In a statement, he said the government has been attempting to reduce foreign debt, which remains the country's "biggest economic vulnerability."

"New Zealand's private savings have started to increase and as a result we have started to reduce our total external debt," English said. "But it still remains high."

International liabilities have decreased from 86 percent of GDP two years ago to 70 percent of GDP in the year ending June, according to English.

In its review, Fitch pointed to some positive features of the New Zealand economy, which it listed as moderate public debt, fiscal prudence, and strong public institutions.

US Manufacturing will Save the Economy.? S&P Answer

Growth In The U.S. Manufacturing Sector Won't Lead The U.S. Economy Out Of The Doldrums

Although the U.S. economic recovery has been weak, it's been enough to stoke demand for manufacturers. Operating results among these issuers have rebounded sharply since the economy hit a trough in 2009. As a result, manufacturers have been able to improve credit measures, build up cash balances, and issue debt in the credit markets when they need to refinance. As a result, Standard & Poor's Ratings Services has upgraded many U.S. capital goods, automotive, and auto supplier companies since 2009 and maintains mostly stable outlooks on them.

Still, we don't believe this progress in the manufacturing sector portends much improvement in the domestic economic recovery. Manufacturing represents a much smaller share of economic activity and jobs than it did in decades past. Since mid-2009, it has accounted for about 9% of total U.S. nonfarm payrolls, down from more than 16% in 1990. Domestic hiring in the manufacturing sector has been modest, and we don't expect it to pick up significantly in the next year or two, particularly given the increasingly mixed economic indicators of the past several months.

Overview

• The U.S. manufacturing sector has rebounded since the 2008 to 2009 recession, but any growth is unlikely to propel a broader domestic economic recovery.
• Companies have gotten most or all of the benefits from previous cost-cutting efforts, and manufacturing jobs lost during the recession aren't likely to return any time soon.
• Our base case economic forecast projects slow but still-positive growth; however, another downturn is increasingly possible and would hurt credit quality in the sector.

We believe sales growth will slow for most U.S. manufacturers while the economic recovery remains weak. Profitability is solid for most companies, often at prerecession or even record levels. However, maintaining this rate of sales growth will become increasingly difficult as companies face year-over-year comparisons with the more normalized activity levels of late 2010 through 2011. In addition to improved demand, manufacturers have benefited from the heavy restructuring they carried out in 2008 and 2009--primarily layoffs--that lowered costs. Further improvements in profitability may be difficult to generate due to higher commodity costs (e.g., those for steel and rubber). Greater price competition if markets slow significantly would also hurt profitability.

Manufacturing Will Follow The U.S. Economy, Not The Other Way Around

In our view, U.S. manufacturers remain more likely to benefit from an economic recovery than fuel one. We see the health of U.S. manufacturing companies reflecting the state of the broader economy, although certain sector-specific conditions also come into play. Economic risks have increased lately. In the U.S., unemployment remains high–-and we don't see manufacturers doing much to change that–-while GDP growth remains sluggish. We believe companies are being cautious about hiring because the outlook for demand is very uncertain. However, good profitability and a base economic forecast that still anticipates slow growth are supporting the sector's credit quality for now.

Standard and Poor's 

US sovereign Downgrade impact : The Thunderstorm

Standard and Poor's, alongwith other rating agencies had kept US's AAA/ rating on Credit Watch in March and were to review in Mid July. Accordingly, S&P, had expressed 'Dissatisfaction' reflecting the U.S. Debt  over Extended Debate. The US Law makers failed to plan  for the ' Debt Reduction' and/or the method to raise money either through ' Increasing Taxation' Or through 'Cutting Spending'.

As promised Standard and Poor's went ahead and downgraded US Sovereign Ratings to AA+. 



                                    S&P had discussed about the implication of this Action, 

1) We would downgrade the debt of Fannie Mae, Freddie Mac, the ‘AAA’ rated Federal Home Loan Banks, and the ‘AAA’ rated Federal Farm Credit System Banks to correspond with the U.S. sovereign rating. 






2) We would also lower the ratings on ‘AAA’ rated U.S. insurance groups, as per our criteria that correlates insurers' and sovereigns' ratings. 


3)  In addition, we would lower the ratings on clearinghouses Fixed Income Clearing Corp., National Securities Clearing Corp., and Options Clearing Corp. as well as on The Depository Trust Co., a CSD. 

This reflects our view that their clearing businesses are concentrated in the domestic market and they are correlated with the U.S. economy. We assess the impact of this scenario as moderate for funds and low for all other financial institutions sectors.

4)  Impact on Funds:
 a) The ratings implications for FCQRs and PSFRs would vary. Would have an impact on funds with exposure to long-term U.S. Treasury and U.S. government securities, but not on funds with short-term investments. For FCQRs, we apply a lower credit score on investments in short-term (365 days or less) U.S. government securities than longer-term investments (more then 365 days). The 73 FCQRs that we placed on CreditWatch negative have significant exposures to U.S. Treasury and U.S. government securities that mature in more than 365 days.
 We would downgrade these 73 funds to reflect the lower long-term rating on the U.S.
  { Principal stability funds, on the other hand, seek to maintain stable and accumulating net asset values, and they invest in short-term debt instruments. As long as the short-term U.S. sovereign rating remains at ‘A-1+’, as we outline, we believe that lowering the long-term rating into the ‘AA’ category would not have an impact on the ratings on these funds because the credit quality of the U.S. would still meet the credit quality standards for all PSFR categories. Barring any potential price volatility associated with the lower long-term rating, the short-term rating on the U.S. government remaining at ‘A-1+’ would effectively be business as usual for the money market fund industry }

All other global financial services:

5)   We would expect there to be few rating actions (including outlook changes) on specific companies. In most cases, this would reflect that their businesses, operating earnings, and assets are largely U.S. based. In either instance, we don’t expect liquidity to be a critical issue for companies. Furthermore, we do not expect the knock-on effects of the lower U.S. sovereign rating in scenario 2 to lead to additional downgrades immediately in the financial services industry.
 6 )  In these scenarios, we would evaluate each company on a case-by-case basis, taking into account macroeconomic conditions and their own financial strength. If we do take rating actions, we could expect to downgrade companies that have a significant U.S. presence, with most of their business and assets in the U.S., or companies in Europe with sizable positive correlations to the U.S. insurance or banking sectors.
7)   We would take fewer rating actions, and more slowly, on financial services companies in Asia-Pacific and Latin America--if indeed we took any.


Conclusions : US down grading may Have Massive Loss of Confidence and Confusion. Recently, I posted many views from Alan Greenspan, PIMCO, And Neil Kashkari, all propounded this. I had Predicted this as ' Black Swan Event' which Market Had not Envisaged and Leave Only factored.
1) The Housing Market and Housing Finance in US and Europe shall have Deep Crators.
2)  The 401( K) Funds and Other Pension funds, Insurers like AIG, Berkshire, MET, Prudential.
3)  The Excessive ' Cash Rich ' Companies like Apple, Microsoft and Bankers will have Treasury Losses. 
4)  The ' Value Erosion' might Have Compounding Effects on Commodities, Trading Houses. 

Credit Agencies under Fire from Central Bankers. Risk Management under threat ..?

The Role of credit rating agencies was exposed, during the Lehman Crisis. The Integrity and validity of the standards were put question. In the recent times, the role of credit agencies has again came into discussion, during European Debt Ratings for Greece, Spain et.al. Jean Paul Trichet, ECB Chairman, was candid to blame the Agencies for there Role, for panicking and destabilizing the Debt Markets.  The On Going US Debt Crisis may also evoke a similar response, which is being underplayed for unknown reasons

                                    The ensuing report shows, How the importance of rating Agencies may be cut down in rating US Debts. The risk management shall now on be more difficult..?

US- No Credible Plan-- Ratings downgraded .S&P