From Downturn to Downgrade

Concerning the Euro-zone plan for debtor aid,it's surprising in terms of the scope and the coordination,in the view of Rick Reider,Chief Investment Officer of Fundamental Fixed Income at BlackRock,who helps manage more than 600 billion dollars in assets.I think it's a pretty significant move.A series of parliamentary approvals have to take place,and we're still in a slow growth European economy,so we're not out of the woods yet.
The one point with the plan is,you're dealing with liquidity,but not solvency.That's the big risk.Also,how do you recapitalise the banks?
The U.S. still has the best refuge for investors.Even if it lost one AAA rating,there's nowhere else for investors to go.If losing the rating is a warning sign,it's ultimately terrific.
The markets are anticipating a 50/50 chance of a downgrade.Companies are in great shape relative to the governments around the world.Ratings agencies need to see real reform or they will downgrade.If the deal is late or weak,downgrade can still occur,Mr.Reider explained.
Although the global markets have transitioned from the collapse of equities engendered by bad loans and obscure instruments,they now must surmount a new challenge in the form of the sovereign debt issue.This aftermath of governmental largess is a follow-on dilemma for the wealth creators and managers.