US AAA Rating Downgrade: much to do about nothing?

Everyone knows the dire straits the world economy is experiencing, so why is everybody upset with the reduction of the US credit rating? The politicians and the news media are screaming “The sky is falling, the sky is falling", as history has shown nothing ever stays the same change is always good. We will weather this storm as we have others in the past.

The public is observing this perceived national tragedy in disbelief and the financial experts are telling us that the credit rating downgrade has a minimal impact on the US bond market, and there is no forced selling of US Treasuries.Therefore, trimming in repo markets or margins intended to protect lenders from daily price fluctuations are directly related to the price volatility of the treasuries not the downgrade.

Yes, the dollar is under pressure, there is no doubt that US bond yields will raise. As for the Euro-zone countries, the borrowing costs will increase (poor Greece). As I said in my previous blog, potential defaults may argue for the restructure of currencies  for countries like Spain, Italy, Portugal, Ireland, and Greece to avoid the imminent threat of a single currency existence.

Transition of global power might just go to China someday. So, get used to it folks, no business as usual for the global business community.