After the S&P Ratings Agency lowered its outlook on Britain to negative from stable, stoking fears other AAA-rated countries which are running huge debt levels could share a similar fate. Experts tell CNBC that a global government debt crisis is coming.
A Global Sovereign Risk Crisis Looming?
We may have a potential global sovereign risk crisis coming, warns Steve Tse, research manager at BEA Union Investment Management.
UK, US Unlikely to Be Downgraded This Year
"If S&P wants to give these governments an early warning sign, yes it's appropriate," Michael Mewes from JPMorgan Asset Management said, adding it is unlikely that the US and UK's debt ratings will be downgraded in '09 or '10. Duncan Weldon from Senhouse Capital joins the discussion.
Don't Compare US' Debt Situation to the UK's
The UK and the U.S. are in totally and utterly fundamentally different worlds, says Paul Schulte, MD of Nomura International.
The Problem with UK's Banking System
The structure of the balance sheet of the UK banking system is totally out of whack with its GDP, tax base and so forth, says Paul Schulte, MD at Nomura International.
Global Economy Will Return to Growth in H2
Paul Donovan, senior international economist at UBS believes the global economy will return to growth in the second-half of the year. But he tells CNBC that growth will be modest at best.
Japan Not in the Same Boat as US, UK
What sets Japan apart from the U.S. and UK is that it does not have the fiscal cost of bailing out or supporting its financial system, notes Takahira Ogawa, director of sovereign ratings at S&P's Ratings Services.
Yen Seen Weakening
The yen should begin to depreciate going forward, foresees Paul Schulte, MD of Nomura International.
Buy Pound Over Aussie
Buy the British pound against the Australian dollar, says Nick Bennenbroek, head of currency strategy at Wells Fargo.
Dollar Still the Safe Haven Currency of Choice?
Once recovery in the global economy is confirmed, we will see a sustained dollar weakness, Bob McKee from Independent Strategy said Friday. "We've had dollar weakness based on a bit of movement towards risk appetite and away from safe haven over the last month or so."
S&P, Dollar to Fall in the Short-Term
"We've still got some more downside trading to go," Bill McLaren, independent trader, said on the S&P 500 index. He sees the index trading sideways through June then hitting a "much more important high." On the dollar, McLaren sees the index possibly reaching its December '08 low.