I don't know what is used instead of brains at S&P. Up until 2007 they easily stamped AAA on collaterized debt obligations consisting of barely prime or even subprime mortgages. Now they slap downgrade on the country which paid its debts for more than 140 years! Yes, last debt limit debate was crazy, unnecessary and damaging US reputation. But memory of it will fade quickly. After all, there were similar partisan battles in 1979 and 1987 (first time republicans played the role of idiots, second time, democrats).
I agree with Barry Ritholtz. This doesn't say anything about US credibility. It says everything about rating agencies credibility. It's zero. And probably will be below pretty soon.
Friday, August 5, 2011
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