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A comment on The horrifying AAA debt-issuance chart. Parent comment

Re:The horrifying AAA debt-issuance chart by derrickpetzold on Friday July 15, 2011 @05:58PM (#2769307)
jellicle is correct the ratings are complete bs. If AAA actually meant something the US would have been downgraded years ago. AAA means there is no chance of default no whatever so ever. It should only be reserved for countries with little or ideally no debt. The fact that our politicians and media are openly talking about default means that AAA does apply to the US but it does. So it means nothing.
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Re:The horrifying AAA debt-issuance chart by mynameishere on Friday July 15, 2011 @06:40PM (#2769415)
The (non-BS) default risk of the US is very close to nil. Hence the AAA is deserved. But the currency risk and the interest rate risk is very high. Here's the pair trade if you want it:

http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...

...notice that the 20 year treasury is more volatile than junk bonds.

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Re:The horrifying AAA debt-issuance chart by kai-zer on Friday July 15, 2011 @07:26PM (#2769546)
You obviously don't understand the concept of duration. You are comparing 5-10yr debt to 20-30yr debt.

More apt comparison would be intermediate treasuries, much different picture (time frame also questionable for a pure comparison):

http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...

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Re:The horrifying AAA debt-issuance chart by mynameishere on Friday July 15, 2011 @08:07PM (#2769647)
You can see some better numbers here. Of course, when I say "interest rate risk", that function involves duration.

http://etfdb.com/etf/JNK/fundamentals/ http://etfdb.com/etf/IEF/fundamentals/

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Re:The horrifying AAA debt-issuance chart by kai-zer on Friday July 15, 2011 @07:28PM (#2769558)
AAA doesn't mean no chance whatsoever and never has, it means minimal credit risk

http://www.moodys.com/sites/products/AboutMoodysRatingsAttac...

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Re:The horrifying AAA debt-issuance chart by derrickpetzold on Friday July 15, 2011 @07:59PM (#2769629)
Well there are 7 levels of A rating. The US certainly doesn't deserve to the top most tier since there is active discussion of default. No I don't think it actually would but what is the point of these ratings if they are being used like this?
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Re:The horrifying AAA debt-issuance chart by natural219 on Friday July 15, 2011 @09:11PM (#2769783)
The is no legitimate discussion of the US defaulting, just political demagoguery. Greece, on the other hand...
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Re:The horrifying AAA debt-issuance chart by RockyMcNuts on Friday July 15, 2011 @07:12PM (#2769506)
If a country has no debt, what security is being rated AAA?
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Re:The horrifying AAA debt-issuance chart by wisty on Friday July 15, 2011 @09:20PM (#2769807)
OK, let's look at structural deficit, GDP growth, and Net International Investment Position.

NIIP is interesting. Despite the US's huge debt, they have a reasonable NIIP of about -25% (I think). So the money is mostly there. It's mostly in private hands, but as long as the private sector is OK, the government will keep collecting taxes.

The obvious problems with the US are its health system (more public funding than countries with free health, but terrible value for money), its military deployments (the military can be an OK if they use it to drive high-tech growth, but actually deploying it very expensive), its prison system (they tend to lock criminals up for a little too long, and they have way too much crime for other reasons).

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Re:The horrifying AAA debt-issuance chart by derrickpetzold on Friday July 15, 2011 @07:55PM (#2769622)
Sorry you are correct the debt is rated not the country.
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