hi all,

i have been trying to understand the US debt crisis that culminated in a an "amicable" solution?...to me that was neither here nor there as this was expected and only served to postponed a much bigger financial turbulence shortly ahead...the debt crisis seems to have been a distraction!!...prior to then the US was literally broke and printing of more money would not do....so only two options were available...to raise the debt ceiling to finance their superfluous spending or to let the dollar clash on a free fall...the logical route prevailed...

now one monster (debt crisis) out through the window and another one (credit rating) in through the door...the way i understand it is that the respected globally recognised credit rating agency Standard & Poor’s downgraded the US's credit rating because the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, would be necessary to stabilize the government’s medium-term debt burden...meaning the US is fast declining in her ability to repay debts....whew!!!

the action by S&P seems to be a major indicator of the real debt situation by the US and have very far reaching market repercusions...the time is very close indeed when the large US creditors will nolonger be interested in buying into her treasuries sending the dollar to its abbys and the real long painful financial mayheim will have been set in motion...it seems the debt downgrading is just but a prelude...don't say you were not warned...

@Kaigangio, We are stuck with the dollar for a long time. They will just print more green bucks....what will the world do?

America has been the source of all major financial crises and will continue to be so for the next few years.

Am not economically savvy and I think S&P may be wrong but I don't think the prospects are good.

Have you ever been running at speed then you realise you are coming up to a brick wall? You know there is going to be serious pain and your choice is only which part of your bod will take the impact. The Euro-zone members are almost there with some of their periphery economies. Over the next 1yr, some like Greece, Portugal will be told something along the lines “it’s not you, it’s us”, as they bid are goodbye out of the Euro. USA’s luck is that the Chinese hold $1trn and it’s now their problem rather than the USA’s. That is, there is no way, the Chinese can sell their $ holdings without causing themselves serious pain.

Mauritius? why would anyone cares what Mauritious is doing?

I’m no financial whizz kid, but this guy’s argument sounds plausible to me...

While the US’s ability to pay its debt is in doubt, it also controls the currency in which it pays that debt, making it unlikely that the country will be forced into nonpayment. S&P has acknowledged the same. Consequently, despite concerns over it’s downgrade , the US will be able to repay the money it borrows. That repayment may come in devalued dollars, but it will come. (Seth Setrakian of First New York Securities)

Another credit crunch.
PAP!
Time for me to be a millionaire in 2013 first quarter!

Actually things are thicker than we think:

Peter Schiff, a noted american financial analyst from Mises Institute has already the following about US debt to China.. "We're not going to pay the Chinese back their money. It's impossible. We can't. We can't possibly."

http://www.americanthink...nevitable_demise_1.html

Also see:

http://www.independent.c...-the-dollar-1798175.html

[quote=kingfisher]Actually things are thicker than we think:

Peter Schiff, a noted american financial analyst from Mises Institute has already the following about US debt to China.. "We're not going to pay the Chinese back their money. It's impossible. We can't. We can't possibly."

http://www.americanthink...nevitable_demise_1.html

Also see:

http://www.independent.c...the-dollar-1798175.html[/quote]

This is a chicken and Egg situation. The chinese cannot recall on the debt because this will hurt the US economy and eventually this will hurt chinese exports due to reduced consumer spend on chinese goods by the americans.

I doubt this is the demise of the dollar as there is no other currency that can replace it or take over. Euro is a useless currency with the PI(I)GS (portugal, ireland, (italy), greece and spain) weighing down on the useless currency. Yuan is too controlled and artificially controlled to be used. Yen is busy sleeping like the japan economy and all the other currencies are just to small for the world.
The Mauritius basket of currencies might be the best and probably only way to go.