Yeah right, Trump is working to feather the nest for one American, his name starts with Donald, surname might as well be duck.
The real problem is the EU cannot be the USA. The countries inside of the EU will not agree to give up sovereignty. Frau Merkel fought forever to punish the Greeks. That is telling of the Union's problems. The only fight in the US was the Confederacy vs. Unions states and that was resolved by the 1870s. There was no sovereignty to battle.
Gotta love those Social-Democratic Monarchy states of Sophisticated Europe. Socialist Fascism tried to disrupt the order and paid dearly. What we have in common is the migrant invasion. Donald Duck was the favourite of Mussolini as a matter of curious fact.
The US AAA downgrade means nothing, short term. Long term, it’s huge We already know America has a debt problem. But there are signs bond markets will force more prudence on its government, sparking a potentially seismic shift. May 19, 2025 https://www.afr.com/chanticleer/sho...ing-long-term-it-s-everything-20250518-p5m076 The biggest losers from the decision by Moody’s to strip America of its last AAA credit rating may well be inside the ratings agency itself. When S&P Global cut the US rating from AAA in 2011, then US Treasury Secretary Tim Geithner got snippy and chastised the company for “really terrible judgement”. Within a few weeks – apparently in a big coincidence – the Justice Department launched an investigation into the firm’s GFC ratings and its CEO was out of the door quickly after. The ratings downgrade will probably be ignored by markets. David Rowe Already, Moody’s has been predictably whacked on social media by US President Donald Trump’s team. If the markets tank on Monday across Asia, and on Monday night in the US, Moody’s should expect more heat. US equity market futures dipped 1 per cent on Friday night following the downgrade. But it’s hard to see a repeat of 2011, when the S&P 500 dropped 20 per cent after the S&P cut. Back then, the downgrade added to a febrile atmosphere on markets. The US economy was weak at the time – a double dip recession seemed a real possibility – and European growth was tepid, too. But it’s also worth noting that America’s debt was about $US14 trillion, compared with $US36 trillion ($56 trillion) now. To put that in context, the debt was about 90 per cent of GDP. Today, it’s over 120 per cent. That’s an extraordinary shift, but it also means Moody’s isn’t telling us anything we don’t already know. After the five years in which US government spending rose 60 per cent, and nominal US GDP rose about 50 per cent, America is carrying a frightening amount of debt, and there is little improvement in sight. Well, duh. Move on. ‘Who cares? Qatar doesn’t’ US Treasury Secretary Scott Bessent seems totally relaxed. This month, he told US politicians that “the debt numbers are indeed scary”, and a debt crisis would involve “a sudden stop in the economy as credit would disappear... I’m committed to that not happening”. But on Sunday night, he told US television that the downgrade is nothing but a lagging indicator. And anyway, it’s totally fine, because the Arabian countries he and Trump have just visited will just keep buying bonds. “On the Moody’s downgrade, who cares? Qatar doesn’t. Saudi doesn’t. UAE doesn’t.” Still, it can surely be no coincidence that Moody’s chose to release its downgrade in the week that Trump backed down from tariffs (which would have increased government revenue, via a tax on consumers) and got closer to pushing his “big, beautiful bill” through Congress. According to Yale University’s Budget Lab, the package would increase America’s debt by between $US3.4 trillion and $US5 trillion by 2034, depending on whether the tax cuts and spending measures it contains are preserved in future years. America’s debt-to-GDP ratio would hit 125 per cent under the bill. Again, none of this will be a surprise to anyone in markets, including the foreign investors who have funded America’s budget deficit forever, and continue to do so. They know America isn’t defaulting any time soon – it’s still home to the world’s deepest and broadest capital markets, the most innovative companies on the planet and the world’s reserve currency – and will mainly be surprised Moody’s didn’t cut its ratings sooner. Bond markets remain vital But even if Moody’s action causes little more than a short-term blip on sharemarkets – perhaps this will be seen as an opportunity for some profit taking given the stonking rally we’ve enjoyed over the past six weeks – it is bond markets that remain vital to watch. The 10-year US Treasury nudged 4.5 per cent on Friday on the downgrade news, while the 30-year US Treasury yield nudged 5 per cent. The time frames of those bonds are interesting to think about for long-term investors such as superannuation funds. Let’s cast forward 10 years. If the US government can’t rein in its spending, or doesn’t increase taxes, then bond yields will keep rising, as credit markets demand a higher return for the risks that keep building. But the US simply can’t afford that. Its interest payments are chewing up 12 per cent of government revenue, up from 9 per cent in 2021, and heading to 30 per cent by 2035 on the Moody’s forecast. The idea America could have to start borrowing just to meet its interest payments is not as far-fetched as it sounds. So eventually, the bond market is going to force prudence on the US government. That means the boost to growth from government spending seen in the past five years will start to wane and foreign investors will start to wonder if there are alternatives. Indeed, Bank of America’s Michael Hartnett says it’s already happening. While the US flips from 100 basis points of rate cuts and $US750 billion of fiscal stimulus last year, to potentially zero rate cuts (due to tariff-related inflation) and a fiscal contraction of $US250 billion this year, both China and Europe are cutting rates and stimulating their economies. The next bull market, he says, is in emerging markets, led by China, where the sharemarket is up 20 per cent in a month, and set to break out of a 20-year trading range. The point is, the Moody’s downgrade is a reminder of the potential for a big shift in investor mindsets, and potentially global markets. As Future Fund chief executive Raphael Arndt said last week, half of the sovereign wealth fund’s portfolio is exposed to America, so how much more exposure does it really want over the next five to 10 years? Particularly if those debt problems are going to force higher taxes, lower spending and weaker growth. And particularly when US stocks are back to the expensive, concentrated position they started the year in. And particularly when US private equity markets are under pressure. And particularly when Trump has introduced a level of uncertainty – particularly for foreign investors America relies on to fund its debt – that increases the risk premium on everything. That’s already being illustrated by the falling US dollar, which is down about 10 per cent against a basket of the world’s largest currencies since the middle of January. In the short term, the Moody’s downgrade is probably a nothingburger. In the long term, it’s probably the biggest issue hanging over investors’ heads.
I gather the nuts and bolts conclusion to the article is, expect investors to shift perspective from USA equities (expensive), into Emerging Markets equities and that China's economy is by no means a rightoff.