
S&P strips UK of last top-notch credit rating after Brexit vote - YeGoblynQueenne
http://www.reuters.com/article/us-britain-eu-s-p-idUSKCN0ZD2EM
======
crdoconnor
It's not so much a prediction as it is a collective hissy fit and a stamping
of feet by the financial sector.

This isn't Greece. A country that controls its IOUs can always satisfy the
IOUs it creates.

When S&P downgraded the US its rationale was comprised of a long form
political op ed that had precisely fuck all to do with credit risk:

[http://www.guardian.co.uk/business/2011/aug/06/sandp-debt-
ra...](http://www.guardian.co.uk/business/2011/aug/06/sandp-debt-rating-
downgrade-statement)

It _might_ have had something to do with the SEC investigating them for fraud,
but hey, what do I know? I'm not a ratings agency.

------
jandrese
I have to think that the people who voted for the Brexit are kind of happy
about this in a way. If they got the big bankers this angry they must have
done something right. Maybe it won't work out well for the citizens, but it
wasn't working out great for them anyway and at least now maybe some of the
fat cats will feel some pain too.

~~~
13years
Actually there may be some very positive results to come if this analysis
holds up. Weakening of the global war machine would be very positive indeed.

"...Without the EU and NATO, Washington could not force Europe and the UK into
conflict with Russia, and Washington could not have destroyed seven Muslim
countries in 15 years without being isolated as a hated war criminal
government, no member of whom could have traveled abroad without being
arrested and put on trial..."

[http://www.foreignpolicyjournal.com/2016/06/24/the-brexit-
vo...](http://www.foreignpolicyjournal.com/2016/06/24/the-brexit-vote-what-
does-it-mean/)

EDIT: downvotes in support of more war? that was unexpected.

------
matt_wulfeck
Seeing these bankers send jabs reminds me of this African proverb:

"When the elephants fight the grass gets trampled."

~~~
achamayou
In this particularly odd case, the grass voted for the elephant war.

~~~
cm2187
To be honest I am not convinced the current volatility is 100% Brexit related.
If it was, the S&P would have barely moved, I don't think anyone seriously
suggests Brexit will affect the US economy.

I think the market volatility is way over-done, and reflect more the general
nervousness with global and US economic growth rather than the direct
consequences of Brexit. Brexit is more of a trigger like a terrorist attack
would be.

The grass may have voted for the elephant war, but the elephants were pretty
pissed off already for other reasons...

~~~
dragonwriter
> I don't think anyone seriously suggests Brexit will affect the US economy.

You're wrong:

[http://www.bloomberg.com/news/articles/2016-06-24/global-
rec...](http://www.bloomberg.com/news/articles/2016-06-24/global-recession-
risk-above-50-on-brexit-t-rowe-price-warns)

~~~
cm2187
Well, there is always someone. I think it's fair to say that slightly higher
trade tariffs in the UK will not result in a global recession.

It might trigger a sell-off of over-priced stocks, like a crash of the Chinese
markets did in August last year, but stocks in the US did not tank because of
the Chinese market crash, they tanked because people were concerned about rate
rises and the US economy.

~~~
achamayou
Slightly higher trade tariffs are the best case scenario though.

There's a lot riding on the London real estate market at the moment, the
financial centre of Europe might be about to shift, and a whole lot of people
who live on the wrong side of the border may or may not be incentivised to
cross back (both EU migrants and British pensioners).

I really do hope you're right, but it's not hard to see why people (and indeed
the markets) are nervous. At this point there's no timeline, and it's not even
clear who's going to be doing the negotiation to begin with.

And then there is a long list of European parties with non-negligible support
who are quite keen to follow the same route.

Looping back into the OP, the potential for even mild trampling is sizeable.

~~~
cm2187
I don't really understand by what mean the financial centre will move because
of brexit. London has been a financial centre way before the EU even existed,
and the bankers do not need to be located where they book things. All banks
will need to do is to open or buy a bank in the EU and book their activities
there. Some staff will have to move, most won't. If traders or asset managers
have to choose between living in London vs Zurich, Luxembourg or Frankfurt,
you can bet they will prefer London because of the language and quality of
life. Many financial institutions are based in Delaware in the US, but are
really ran from New York. Is Delaware really a financial centre competing with
New York?

There has been a lot of fear mongering going on in this campaign (on both
side) and I would take with a big pinch of salt the catastrophic forecasts of
the world post brexit.

Disclaimer: I work in a bank in the UK.

~~~
achamayou
There's a good summary of what may change here:
[http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8e...](http://www.ft.com/cms/s/0/a3a92744-3a52-11e6-9a05-82a9b15a8ee7.html)

It's very open at this point (since nothing has been decided really), but it's
quite difficult to believe that there won't be any shift at all and that
London will be able to retain all of its existing financial services
marketshare in Europe.

I won't comment on your claims about the quality of life in those cities vs
London, but I think it's worth bearing in mind the fact that they already have
a significant amount of financial businesses today, and that traders and asset
managers may not like being paid in a rapidly depreciating currency.

There are really some justified concerns about what's going to happen to the
financial industry in the UK post-Brexit, it's not just all mindless fear
mongering.

Your comparison with Delaware and NY isn't applicable at all really. The US
operates under a single currency, with a single set of financial regulators,
with an even stronger version of passporting. There are local differences in
laws and taxes applicable to corporations between states, but nothing like
what you find when you cross an actual border.

------
cm2187
The UK is now rated like the US government, Brexit has pushed it to the verge
of bankruptcy!

------
djschnei
All to be expected. 1) Things are clearly less predictable now. 2) The mega
banks are in bed with the central banks, of course they want to send a
message.

~~~
cm2187
You are suggesting S&P = mega bank? S&P is more like the "What Hi-Fi?" of
finance...

~~~
r00fus
S&P is more like the "Gartner Research" for finance. I'll just leave this
here: [http://venturebeat.com/2011/04/07/windows-phone-beat-
iphon/](http://venturebeat.com/2011/04/07/windows-phone-beat-iphon/)

