Wall Street braces for impact (17)

NEW YORK — A downgrade of United States’ top-tier credit rating has Wall Street scrambling to figure out the knock-on effects for the financial system, from mortgages to banks to markets that rely on U.S. Treasuries for collateral.

The immediate effects of the Standard & Poor’s downgrade of the country’s AAA credit rating late on Friday are likely to be modest, largely because it was expected and already at least partly discounted, experts said.

Many downplayed the likelihood of the sort of financial contagion experienced when Lehman Brothers went under in September 2008. Few had expected it to have to file for bankruptcy, and few were prepared for the fallout. Money market funds froze, some major commercial banks collapsed, and many major dealers and finance houses teetered on the edge of failure.

But even if that type of scenario is unlikely this time, bankers, lawyers and investors wonder if there could be longer-term consequences of S&P’s downgrade, given that U.S. sovereign credit is bedrock to the world financial system.     The analysis is complicated because so many of the potential stress points for the financial system are relatively opaque areas like over-the-counter derivatives markets.

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See Also:

G20 pledges action as ECB backs Spain, Italy

Some European Markets Gain, While Markets in Asia Sink After U.S. Credit Downgrade

Europe markets hit by fresh turmoil

Austerity has failed, eurozone on brink as world crisis rages

Afternoon Updates:

12:17 pm EDT, August 8th, 2011 — S&P fallout: Fannie and Freddie downgraded

12:18 pm EDT, August 8th, 2011 — S&P downgrades Fannie and Freddie, US-backed debt

12:19 pm EDT, August 8th, 2011 — No Statement or Comment from Obama on U.S. Credit Rating Downgrade

12:20 pm EDT, August 8th, 2011 — Dem: US credit down because of military spending

12:21 pm EDT, August 8th, 2011 — Captain of the Titanic agrees to go down with the ship

12:23 pm EDT, August 8th, 2011 — Two Weekend Op-Eds Exemplify the Delusions of the Left and the Insights of Conservatives

12:24 pm EDT, August 8th, 2011 — Moody’s cautious about U.S. deficit cuts plan

1:07 pm EDT, August 8th, 2011 — Losses Grow on European Markets

1:22 pm EDT, August 8th, 2011 — Bank of America stock hammered after AIG suit

1:24 pm EDT, August 8th, 2011 — “Jaws”

4:10 pm EDT, August 8th, 2011 — Gardiner: 10 key reasons why the Obama presidency continues to melt down

5:23 pm EDT, August 8th, 2011 — Deja Vu: Dow Crumbles 635 After Economic, Debt Fears Engulf Wall Street

Notes:

So much for Obama and his lefty freaks.  “Done like dinner” comes to mind.

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