After American markets rose again on Monday, Asian markets seem to be benefiting from that momentum and are climbing a little bit as well. There are quite a few factors that are causing the US markets to rise, including takeover talks in regards to Google and Motorola, but at this point in time, any gains are good gains.
There is also some anticipation building in regards to the Franco-German meetings that will be happening later this week. Once there are some more solid plans in place as to how the Euro Zone is going to handle their debt crisis, you can expect the markets to climb even more.
Has The Balance Of Power Shifted From US To China?
Traditionally, China has been seen as the fiscally conservative nation, while the US was more willing to take on debt and take risks. As we have all seen, it has backfired on the US and they are in deep trouble.
What’s worse, China is the biggest creditor of the US, holding over $1 trillion worth of US debt. This obviously means that they have a tremendous amount of power over the US. There is a good chance that they will start making demands on how the US should restructure their fiscal system and have an influence over future decisions. If the US concedes is another issue altogether.
SEC Investigating Credit Rating Downgrade From S&P
Under the Dodd-Frank Wall Street law, the SEC has the power to investigate credit agencies and the way they handle their decisions. Each agency has a specific set of policies that they have to follow every time they make a decision – the SEC is just ensuring all of these were followed.
While S&P has made it clear multiple times, they don’t think they made any mistakes when they chose to downgrade the US rating. If this is the truth, the SEC investigation will vindicate them. If it isn’t, then appropriate measures will be taken.
It will be a while before we know the outcome of this investigation, but it is comforting to know that someone is looking into the issue.