$E-mini NASDAQ 100 Futures(JUN4) (NQmain.US)$ anyone can exp...
anyone can explain this article ?? who is fitch and why only fitch can downgade usa rating ? need some pro to explain thanks
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razo2 : Fitch is supposed to be an independent rating agency. they rate the bonds for US based on their debt ceiling and ability to pay off their bonds. bonds are IOU from the government to the party that lends the money to the government with an interest.
is just like your credit card company, you can spend as much as you want but in the end of the day you need to pay your debt. if you keep taking in higher credit limit without paying your credit card, your credit rating will be downgraded. same goes for US government.
you cannot be taking in unlimited credit without paying your debts as a country. then your currency becomes useless like Zimbabwe or Argentina. things get worse when your debt is more than 40% of your GDP.
I forgot to mention now that the government is going to issue new bonds. these bonds are going to be charged same interest as what JP sets to fight inflation minimum. anything more is based on agreement between the government and the lender. sometimes government give 10% bond interest for long term bonds.