Moody's reaffirms Canada's triple-A rating

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    Jul 28, 2011 7:50 PM GMT
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    CBC News

    Bond rating agency Moody's Investor Services is maintaining Canada's debt rating at triple-A, the highest possible.

    The firm said Thursday the AAA rating was warranted, citing among other things, the country's "high degree of economic resiliency" and deficit-cutting efforts by the federal and provincial governments.

    It based its assumption about resiliency on Canada's "high per capita income, the large scale of the economy and its diversity, including natural resource industries and a competitive manufacturing sector, as well as a well-developed and well-regulated financial market."

    Moody's said there are risks posed by Canada's housing market — where many mortgages are insured by the federal Canada Mortgage and Housing Corporation — and Quebec's sovereignty issues, but it rated those as low.

    Moody's considered a major downturn of the housing market unlikely and, even in an extreme case, Ottawa's extra costs would be relatively small.

    Similarly, Quebec's sovereignty movement doesn't seem to pose a significant risk since the issue doesn't appear high on the political agenda.

    Some market watchers have warned that the U.S. is in danger of losing its triple-A rating, especially if the current debt ceiling talks fail to make a significant dent in the deficit.

    With files from The Canadian Press.

    http://www.cbc.ca/news/business/story/2011/07/28/moodys-canada-debt-rating.html
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    Jul 28, 2011 7:55 PM GMT
    I read another aritcle that stated Canada has handled herself well during the economic downtown that's been going on tfor the past few years. You guys are owed a well deserved kudos.

    I wish my country would get it together... somehow.
  • nicehottie24

    Posts: 64

    Jul 28, 2011 9:03 PM GMT
    I think that it's completely ridiculous that Moody's is considering Quebec sovereingnty issues to rate the debt rating of Canada. If Quebec ever does sovereignty, it might affect the debt rating of Canada on a short term period, but I'll never believe it will affect it for a long term period and that Canada will never be able to catch up from that event. Quebec sovereignty has nothing to do with the debt rating. But apart that fact, I'm very glad that Canada got the Triple A
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    Jul 28, 2011 9:38 PM GMT
    Okay, a few things. First of all, Moody's and the other major credit rantings agencies (CRAs) - Fitch and S&P - are notoriously short-sighted and usually wrong, but also strategically wrong, in that they tend to serve the interests of the bankers who sit on their boards of directors (hardly an unbiased source of information).

    These CRAs were totally wrong on the housing bubble, continuously giving the housing market good ratings in order to help fuel the bubble and investor confidence (and thus fill the pockets of the men who run the CRAs themselves). In terms of Greece and sovereign debt, they continue to downgrade these nations, which are in major debt crisis, but it only has the effect of further exacerbating the debt crisis, making loans more expensive (i.e., coming attached with higher interest rates), and thus further entrenching the debt crisis itself.

    Canada gets a good rating because our SOVEREIGN debt is quite limited compared to ALL other major industrialized nations.

    However, in terms of a total debt crisis - which is what the world is really facing - not just 'sovereign' (i.e., national) debt, Canada is just as screwed as the rest. Our middle class, specifically, is highly indebted.

    As of 2009, the average Canadian was carrying more debt than the average American: "we used to save much more—as recently as 1990 we socked away 13 per cent of our disposable incomes—but the average debt carried by Canadian households has jumped 71 per cent since then to $90,700, growing six times faster than the average household income."
    http://www2.macleans.ca/2009/03/19/pay-up-or-get-out/

    By February 2011, the average Canadian family's debt hit $100,000.
    http://www.vancouversun.com/travel/Average+Canadian+family+debt+hits/4298501/story.html

    In a global debt crisis, and in an age of 'global austerity', the middle class is going to be made extinct. Canada seems secure in comparison to the giant bubble below us, but when that bubble bursts (and it will), the facade of economic stability we maintain at present will burst with it. We are deeply integrated with the American economy, and as it tanks, so too will ours. Job loss will continue, we will see economic migration to Canada from America and elsewhere, an over-burdened social service-welfare system, declining wages, increasing costs, inflation, rising taxes, decreasing loans... and thus, the facade of the middle class will be sapped dry.

    So, Moody's gives us a triple-A credit rating. Wonderful. But who rates the raters? They have done an awful job, and look at the world through the lens of what is important to bankers and billionaires, not everyone else.
  • patmos9990

    Posts: 146

    Jul 28, 2011 9:41 PM GMT
    Meohmy is Man of the Day because of his good looks but his intelligence in what he just wrote is the real turn on for me.
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    Jul 28, 2011 9:45 PM GMT
    The author of the "Big Short" had nothing nice to say about Moody's employees:
    “Guys who can’t get a job on Wall Street get a job at Moody’s,” as one Goldman Sachs trader-turned-hedge fund manager put it. Inside the rating agency there was another hierarchy, even less flattering to the subprime mortgage bond raters. “At the rating agencies the corporate credit people are the least bad,” says a quaint who engineered mortgage bonds for Morgan Stanley. “Next are the prime mortgage people. Then you have the asset-backed people who are basically like brain-dead.”
    ...
    “The ratings agency people were like government employees.” Collectively they had more power than anyone in the bond markets, but individually they were nobodies. “They’re underpaid,” said Eisman. “The smartest ones leave for Wall Street firms so they can help manipulate the companies they used to work for. There should be no greater thing you can do as an analyst than to be the Moody’s analyst. It should be ‘I can’t go higher as an analyst.’ Instead it’s the bottom! No one gives a fuck if Goldman likes General Electric paper. If Moody’s downgrades GE paper, it is a big deal. So why does the guy at Moody’s want to work at Goldman Sachs? The guy who is the bank analyst at Golman Sachs should want to go to Moody’s. It should be that elite.”

    [url]http://mensmorningnews.wordpress.com/2011/07/15/moody%E2%80%99s-and-sp-the-view-from-wall-street/[/url]

    Maybe the coming downgrade won't be so bad after all, but I'm just grasping at anything that would give me hope now.
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    Jul 28, 2011 9:54 PM GMT
    What's 'Canada'?
  • vintovka

    Posts: 588

    Jul 28, 2011 9:56 PM GMT
    MeOhMy said

    In a global debt crisis, and in an age of 'global austerity', the middle class is going to be made extinct. Canada seems secure in comparison to the giant bubble below us, but when that bubble bursts (and it will), the facade of economic stability we maintain at present will burst with it. We are deeply integrated with the American economy, and as it tanks, so too will ours. Job loss will continue, we will see economic migration to Canada from America and elsewhere, an over-burdened social service-welfare system, declining wages, increasing costs, inflation, rising taxes, decreasing loans... and thus, the facade of the middle class will be sapped dry.

    So, Moody's gives us a triple-A credit rating. Wonderful. But who rates the raters? They have done an awful job, and look at the world through the lens of what is important to bankers and billionaires, not everyone else.


    It's refreshing to see someone post something well informed and well reasoned here on RJ. It happens to infrequently.
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    Jul 28, 2011 10:18 PM GMT
    Ohio was also upgraded.
  • nicehottie24

    Posts: 64

    Jul 28, 2011 11:37 PM GMT
    TroyAthlete saidWhat's 'Canada'?


    It's a country