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‘AAA’ != ‘S.A.F.E’ Is US on the credit death row

July 13, 2008

After the disastrous news of Freddie Mac and Fannie Mae’s fall from grace and a very weak rumor of a USD 15billion bailout, perhaps every investor somewhere in the back of his mind is asking one question: Is US going to lose its AAA credit ratings?

Fat Chance, you might say. Possible, as Hollywood movies like to quote, “the last bastion of the free world” cannot fall. But, if a certain perspective is added to the entire situation, life might become a lot easier to decipher.

Salvo 1: An estimate of around 400billion USD has been given in this housing collapse bailout. Thats a huge amount.

Salvo 2: If you consider the national debt, including the Mediclaim, then the total US debt raises to around, USD 53 trillion [you know how much is that? Go figure the zeros in that]

Salvo 3: Remember, Remember, the Fifth of November? Okay not quite the fifth but the thirtieth of November. The day, when Enron shares plummeted from $99 to under $1. Four days later it filed for the largest bankruptcy in US history. You know what the icing on the cake is: Enron was considered the boat which can never sink [a la Titanic], “World’s Most Innovative Company” [in what? swindling people?] and hold on [drums please!!!] AAA rating.

So? does ‘AAA’ rating also mean ‘SAFE’. I bet my $2 on it, but ‘AAA’ ratings not necessarily mean a safe haven for you to invest your money.

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