Monday, December 22, 2008
"In the past month, there has been a big selloff in a corner of the mortgage-bond market that investors once thought impregnable: triple A. ... The most troubling change has been a wave of selling in triple-A prime mortgages. ... Leland Abrams, a trader at a Florida broker dealer, says his firm has bought prime triple-A mortgage bonds for about 30 cents on the dollar. Similar bonds traded for about 70 cents a few months ago", Scott Patterson at the WSJ, 9 December 2008.
"In a sign of how quickly the global crisis has reversed Russia's economic fortunes, Standard & Poor's cut the country's debt rating on Monday for the first time in a decade, warning of the 'rapid depletion' of Russia's massive reserves. ... The government has steadily added to its bailout package, which now totals more than $200 billion. ... S&P highlighted Russia's spending of its reserves as a key reason for its downgrade to BBB from BBB+, adding that a further downgrade is possible. ... Its current debt remains at modest levels", Gregory White at the WSJ, 9 December 2008.
AAA may mean nothing today.
In reading this article, I thought, "If Russia is only a BBB credit, why should Uncle Sam be higher"? I await S&P's downgrading Unc's debt.