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Here's an article from the Wall Street Journal comparing the differences in opinion over America's potential loss of it's AAA rating. As we already know, Standard and Poor announced there is a 1 in 3 chance of this happening. On the other hand, the Treasury Secretary Tim Geither, announced on air that there is no chance of this happening. The article goes on to point out S&Ps previous inability to properly rate companies such as Enron and Bear Stearns.
What are you thoughts about the article and S&Ps ratings?
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The S&P and Moody's Investors Service have and continue to lose credibility. The raters showed they could be corrupted when they put their AAA marks on countless subprime mortgage bonds that quickly turned south. However, foreign markets use these agency's and services and a downgrade would set off a foreign crises that would result in low investor confidence. This news just reiterates that we need to compromise on our current deficit and find innovates but still fiscally responsible methods to manage our debt.
ReplyDeleteHey, the link did not work for me. Is this it?
ReplyDeletehttp://blogs.wsj.com/economics/2011/04/19/life-after-aaa-analysts-thoughts-on-a-what-if-scenario/