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Triple AAA Rating. We hear the news each day and one topic has been getting a lot of press. Just how Great Britain PLC is doing on the economic front.
We hear the news each day and one topic that’s been getting a lot of press is how Great Britain PLC is doing on the economic front. Not so good in recent months according to Rating Agencies.
What are rating agencies? Well nothing to do with rates as we know them. They are specialist companies that are world renown and much respected in the banking and financial fraternity. They were family owned business that started in the 19th century, in the early days of American civilisation. When the railways were being built many failed and went into insolvency and the rating agencies were formed to recommend the good investments.
The first rating agency was the forerunner of Standard & Poors, Henry Varnum Poor. John Moody started a similar venture, and both these businesses are alive to this day. Another entrant joined the market and was the first agency to create an alphabetical ranking of “Bonds” in the early 19 20’s. In 1975 the three businesses was recognised as statistical rating agencies. Now we have ten.
What is Triple AAA rating? It could be a large or a small battery but in actual fact it is a financial measure in banking. It’s the tops, the Moët & Chandon of Champagne, the Hennessy of Cognac. The AAA is usually applied to business’s or countries which are likely to have to have extremely good chances” of meeting their financial commitments. Because of the quality rating it means the holder will usually get more favourable interest rates as they are considered very little risk.
In recent years France and America both lost their AAA ratings and they have got through their crisis. Our Chancellor, George Osborne is going through the biggest struggle our government has faced in the last decade. The reason for the downgrade is the lack of growth in Great Britain combined with the increasing National Debt.
So next time you hear about Triple A Ratings don’t mistake it for a type of larger or a battery size but listen and learn as it impacts on everyone’s future prosperity and perhaps we should spare a thought for our other European neighbours who are not quite as well off as us.
By Paul Rogerson