raging on ratings, dying on debt

are we there yet?
as the united states of obama remains on a deadlock over the issue of raising the government's borrowing cap and credit rating agencies threatening to cut the country's debt ratings from triple a, the rest of the world is on the edge, watching, holding their breath on what will happen next.

analysts, fund managers, economists, policy makers, etc had warned that the storm that will be unleashed by a u.s default and subsequent rating cuts will even be worse than the most recent financial tsunami that nearly plunged the united states into a depression and pushed the global economy into the brink of a double-dip recession.
already, investors are dumping the u.s. dollar, stocks and bonds in favor of gold, considered a safe haven in dire times.
here's what the influential people on earth are saying about the impending financial armageddon knocking at the gates of financial markets globally.


"on the debt ceiling, the clock is ticking, and clearly the issue needs to be resolved immediately," newly installed imf managing director and former finance chief of france christine lagarde.
"a credible fiscal adjustment plan is needed sooner than later."


"for us, the issue is not the debt limit, it's the underlying fiscal dynamics," david beers, london-based managing director of international debt rater standard & poor's.
"it's not obvious to us that this political divide that is proving difficult to bridge is going to be any more bridgeable three months from now or six months from now or a year from now."

"this is no way to run the greatest country on earth," u.s. president barack obama. 
"the american people may have voted for a divided government, but they didn't vote for a dysfunctional government."

"we see a growing chance that, even if congress raises the debt ceiling, moody's or s&p may still cut the u.s. credit rating, based on the risk introduced by the current situation as well as the longer-term budget imbalance," chief fixed income strategist guy lebas of janney montgomery scott.

“i have some confidence that there is still sanity left among u.s. congressional leaders and that they will raise the debt ceiling on time,” bangko sentral ng pilipinas (philippine central bank) deputy governor diwa guinigundo.


these are interesting times. 
who would have thought that we would see the day when the world's biggest economy would be on a downgrade watch, or that it could default on its $14 trillion of debt.

while rating agencies have been vilified in the past and were largely blamed for their failure to warn the markets about the dangers of toxic u.s. home mortgage debt instruments (or whatever they call them), it could not be denied that they still have a tremendous influence not just on the financial markets but on policy makers as well.

so will they or won't they?
stay tuned.

(all quotes are culled from bloomberg, reuters, cnn, and philippine daily inquirer. picture of president obama taken from the internet. as usual, please don't sue me. no copyright infringement was intended.)


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