The impact of United States debt crisis on technology

If you work in the financial industry, you may already have a sense of what the impact is. If you happen to work for a firm that manages portfolios, such as an asset management company, if you don’t know what the impact is, you ought to. And if you fall into the former category of not knowing, by the end of this post, you will… :-) I speak from experience here as I used to be a senior technologist for a UK based asset management company.

In case you have been living under a rock, you have heard that the United States Government is wrangling through numerous budgetary issues. The most notable of these issues is whether to raise the debt ceiling. The US is always refinancing its debt. US Treasury securities are issued all of the time. Treasuries are one of the chief ways portfolio managers hedge against risk. PM’s will usually purchase US Treasuries of the same duration as the  security being purchased. It has always been ASSUMED that treasuries have a AAA credit rating. In other words,  there is code out there that  hard codes this assumption. Often,  the process that hydrates a database simply associates the best credit rating with US securities. Ask anybody in the business and they will tell you that it’s just a fact – US Treasuries  have the best credit rating you can have – AAA. Its not even questioned. It’s an assumption like magnetic north, Isaac Newton’s 3 laws of motion, the speed of light, etc.

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