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Old 06.08.2011, 16:26
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US downgraded

I guess everyone should have priced this in some time ago, but it will be interesting to see the reaction on Monday.
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Old 06.08.2011, 16:34
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Re: US downgraded

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I guess everyone should have priced this in some time ago, but it will be interesting to see the reaction on Monday.
If everyone remembers it's S&P and their involvement in the current economic crisis, hopefully not much.
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Old 06.08.2011, 16:53
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Re: US downgraded

With so much of the American psychosis tied to the weekly news cycle, the timing is significant. They made the announcement at the end of a Friday just before Congress goes on recess. Whenever politicians don't want a story to go on living, but they need to release the info, they do it on a Friday just when the news cycle is dying and people stop paying attention.

Depending how well the story grows legs, by the time Monday rolls around, it may not even be a story anymore and many will have forgotten about it. Politicos on the Sunday morning talk shows usually have some influence on keeping these things alive over the weekend.

It's significant though, so it shouldn't die. But again, I think the timing of their announcement will have a lot of influence. For me it's going to be most interesting to see if/how the markets and forex react.
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Old 06.08.2011, 20:13
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Re: US downgraded

Yes, the Fri night announcement seems to be the standard way to kill a story. This one shouldn't die. Watch Obama get most of the blame for this when the wost complications came from the Tea Party There shouldn't have been a deal at all. Typically the debt ceiling is raised without so much drama.
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Old 06.08.2011, 20:37
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Re: US downgraded

Will you be buying your house in CH by converting $ into CHF?

We bought our house here in Ł changed into CHF 3 years ago- we would have to pay double now, and in fact, just couldn't do it!
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Old 06.08.2011, 20:42
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Re: US downgraded

That's one of our issues for the long term until things even out :-/

Luckily, we have access to CHF to cover down payment and most things for a while. If we had to do it with USD right now, we'd have to wait.
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Old 06.08.2011, 20:52
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Re: US downgraded

My commiserations. But I thought you said you had seen THE house and wanted to go ahead with the purchase. How much has the $ dropped since June 9th? Have you calculated how much extra $ you'd need NOW to complete your purchase (I can assure you I take no pleasure in this, but it can't be ignored).
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Old 06.08.2011, 20:57
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Re: US downgraded

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My commiserations. But I thought you said you had seen THE house and wanted to go ahead with the purchase. How much has the $ dropped since June 9th?
I have a screen shot from April 24th. I remember taking it to show to my American friends how much the rate sucked for the dollar.

On another note, I'm watching CNN and this journalist (American) is talking about the "IMPACT" of this downgrade, and that it might "spread" to Europe, maybe even affecting FRANCE!
Attached Thumbnails
us-downgraded-screen-shot-2011-04-24-3.10.57-pm.jpg  

Last edited by KeinFranzösisch; 06.08.2011 at 21:10.
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Old 06.08.2011, 21:10
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Re: US downgraded

Believe me, this is a huge issue for us. We would have the CHF to not have to convert any money for the initial sale and renovation. We love this house, so it would be awful to give it up... but right now it boils down to whether or not we can afford the reno. If we get the house, we hope to rent it out until we actually move... My FIL rents a few places, so he could help us out there. We hope to not use any USD until the CHF has leveled out more... Who knows when the USD will build back up
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Old 06.08.2011, 21:11
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Most Americans seem blissfully unaware of their of their currency tanking.
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Old 06.08.2011, 21:11
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Re: US downgraded

(just to clarify.. the CHF we have are already in CHF... no need to convert yet)
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Old 06.08.2011, 22:23
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Re: US downgraded

Not much happened when Japan lost its Aaa.... Also the UK was the same when it was bankrupt after WWI (remember it defaulted on its debt to the US government?) yields were steady and then dropped all the way down to 2% for long term bonds during the next recession.

Typically when you have a deep bond market and currency it doesnt matter so much. Tax revenues to cover the debts are far more important.
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Old 06.08.2011, 22:34
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Re: US downgraded

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Believe me, this is a huge issue for us. We would have the CHF to not have to convert any money for the initial sale and renovation. We love this house, so it would be awful to give it up... but right now it boils down to whether or not we can afford the reno. If we get the house, we hope to rent it out until we actually move... My FIL rents a few places, so he could help us out there. We hope to not use any USD until the CHF has leveled out more... Who knows when the USD will build back up
What permit do you have? not sure if you will be allowed to rent it out, especially if any of the deposit came from a pension fund.
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Old 06.08.2011, 22:47
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Re: US downgraded

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What permit do you have? not sure if you will be allowed to rent it out, especially if any of the deposit came from a pension fund.
We'll be talking with my FIL about the plan. He said it should be fine (they rent multiple houses). But, we haven't gotten the details yet. We'll have more info on Tues to help make our decision on if the house, in general, is feasible.
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Old 07.08.2011, 00:42
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Re: US downgraded

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Most Americans seem blissfully unaware of their of their currency tanking.
Well if you live in USA & your salary is the same & the things you buy are the same price then what is there to be aware of?
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Old 07.08.2011, 03:15
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Re: US downgraded

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Well if you live in USA & your salary is the same & the things you buy are the same price then what is there to be aware of?
Agreed. I know too many folks who have never left the States. They don't really get it. Until the crisis hits them in their lives (eg through their gas/mortgage/cost of living), they feel there is no reason to worry.
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Old 07.08.2011, 06:47
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Re: US downgraded

Well the prices are not the same...Everything is up by about a $1 yet income remains the same. We could see a big difference now in May versus Dec. of last year, you could sense on people that things are not going well. At least thats in Tampa Bay area....
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Old 07.08.2011, 06:57
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Re: US downgraded

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Most Americans seem blissfully unaware of their of their currency tanking.
Is the dollar tanking? Look at this link, where I compare the dollar to every major currency I can think of:

http://www.google.com//finance?chdnp...:USDEUR&ntsp=0

strange how the CHF is an outlier, yes? Obviously, the dollar is depreciating, but what we uniquely see is that CHF is rising versus everyone, and more rapidly than everyone. In other words, it only appears to tank to those of us holding CHFs.

The only way an american would see it is as tanking being being in Switzerland. Granted gas prices are up, but they are still far cheaper than the rest of the world, and they go up for a lot of non-currency-based reasons, too. I don't think most Americans would connect $4 gas to weak currency, and I'm not even sure that's the biggest reason.
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Old 07.08.2011, 08:18
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Re: US downgraded

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Is the dollar tanking? Look at this link, where I compare the dollar to every major currency I can think of:

http://www.google.com//finance?chdnp...:USDEUR&ntsp=0

strange how the CHF is an outlier, yes? Obviously, the dollar is depreciating, but what we uniquely see is that CHF is rising versus everyone, and more rapidly than everyone. In other words, it only appears to tank to those of us holding CHFs.

The only way an american would see it is as tanking being being in Switzerland. Granted gas prices are up, but they are still far cheaper than the rest of the world, and they go up for a lot of non-currency-based reasons, too. I don't think most Americans would connect $4 gas to weak currency, and I'm not even sure that's the biggest reason.
Go back to 2005 to present and compare. You're not seeing much on this graph because it's only for the current year.

*edit: sorry. I didn't realize it could scroll backwards...
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Old 07.08.2011, 10:10
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Re: US downgraded

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Tax revenues to cover the debts are far more important.
But that's the issue, isn't it? US taxes are pretty low already and there seems to be way too much political resistance to raising them.
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