Saturday, August 06, 2011
For whom the credit ratings toll
Though I can't get out of my mind the thought that S&P is posturing as a tough-guy ratings agency after its sycophantic role in the subprime-mortgage fiasco, its surprise downgrade last night of the US credit rating should nevertheless serve as a warning bell for the nation. Look at everything happening in Europe. Though it's unlikely the US will go through similar credit-market agony, it's no longer unthinkable that investors will turn on the US one day. ... The recent fight over the debt ceiling played a huge role in this S&P move. It's depressing to contemplate how Washington will ever get its act together to attack our long-term deficits in a common-sense way. ... The precise timing of S&P's move was a surprise. But the act itself wasn't. As noted here a few days ago (see post immediately below), the ugly debt-ceiling debate merely hastened the day when a downgrade would come.
Though I can't get out of my mind the thought that S&P is posturing as a tough-guy ratings agency after its sycophantic role in the subprime-mortgage fiasco, its surprise downgrade last night of the US credit rating should nevertheless serve as a warning bell for the nation. Look at everything happening in Europe. Though it's unlikely the US will go through similar credit-market agony, it's no longer unthinkable that investors will turn on the US one day. ... The recent fight over the debt ceiling played a huge role in this S&P move. It's depressing to contemplate how Washington will ever get its act together to attack our long-term deficits in a common-sense way. ... The precise timing of S&P's move was a surprise. But the act itself wasn't. As noted here a few days ago (see post immediately below), the ugly debt-ceiling debate merely hastened the day when a downgrade would come.
