Bank of America: S&P May Downgrade US Again in November

CNBC

Monday, 8 Aug 2011 | 12:11 AM ET

Standard & Poor's may downgrade the long-term credit rating of the U.S. once again in less than three months after sending shockwaves through the bond and stock markets by stripping the nation of its top notch triple-A rating last week, according to an emergency Sunday night conference call for clients of Bank of America Merrill Lynch.

"We do expect further downgrades," said Ethan Harris, North American economist, on the call. "We doubt the newly appointed bipartisan commission will come up with a credible long-term deficit reduction plan. Hence by November or December we would not be surprised to see S&P downgrade the debt again from AA-plus to AA."

For article GO HERE


And meantime S & P's assessment is at odds with the prime minister's.

New Zealand among vulnerable nations, says S&P

National Business Review

Monday August 08, 2011

New Zealand is not immune to disruptions in offshore capital markets and could suffer from an export-driven slowdown, ratings agency Standard & Poor’s said today.

While stating that Asia Pacific nations would not be immediately affected by the downgrade of the US credit rating over the weekend, S&P warned that some sovereigns could be hit hard from a fresh global financial crisis.

The agency said the US rating change to AA+, together with weakening sovereign creditworthiness in Europe, pointed to an increasingly uncertain and challenging environment ahead.

"If a renewed slowdown comes, it would likely create a deeper and more prolonged impact than the last one," S&P said in a statement.

“The implications for sovereign creditworthiness in Asia-Pacific would likely be more negative than previously experienced, and a larger number of negative rating actions would follow.”

S&P singled out New Zealand among a handful of other Asia Pacific countries whose economies could suffer as a result of weaker demand for exports and/or lower export prices, or both.

At the same time countries that have weaker external positions could come under pressure as international liquidity tightens forcing some to require additional external assistance to prevent sharp economic adjustments.

''Those with financial systems reliant on off-shore markets may face reduced liquidity and a heightening of refinancing risk in the near term. To varying degrees, Pakistan, Sri Lanka, Fiji, Australia, New Zealand, Korea, and Indonesia may be affected,'' S&P said.

And some countries continue to bear the scars of the recent downturn.

''The fiscal capacities of Japan, India, Malaysia, Taiwan, and New Zealand have shrunk relative to pre-2008 levels. If a renewed slowdown comes, it would likely create a deeper and more prolonged impact than the last one. The implications for sovereign creditworthiness in Asia-Pacific would likely be more negative than previously experienced, and a larger number of negative rating actions would follow.''

New Zealand is the only country other than the U.S. that has a AA+ rating from S&P and an Aaa grade from Moody’s.

Earlier today Prime Minister John Key said New Zealand was in a relatively good position to weather the global economic turmoil following the US credit downgrade and the ongoing eurozone debt crisis.

He said he does not believe New Zealand's economic growth will be stopped in its tracks as Australia remains the country's largest market and ‘for the most part we are competitive there against Australia" and higher commodity prices offset some of the appreciation of the NZ/US exchange rate.

For rest of article GO HERE

The European Predicament

There was a reasonable interview on Radio New Zealand with the BBC correspondent in Berlin, Steve Evans.


It is available HERE