Why The Moody's Warning About US Debt Is Pure Nonsense

Discussion in 'Current Events' started by Ringel05, Jul 14, 2011.

  1. Ringel05
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    Ringel05 Diamond Member

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    (This guest post originally appeared at NewDeal2.0)

    America’s Triple AAA credit rating could be at risk should its nascent economic revival not develop into a full-blown recovery, Moody’s Investor Service warned yesterday. The credit ratings agency cautioned that if the US were to grow at slower pace than expected, the largest economy in the world’s already-extended finances could be over-stretched, in turn damaging its AAA credit rating.

    Sound familiar? The so-called “Big Three” ratings agencies have been making claims like this for years: in Japan, the UK and, now, the United States. It is worth recalling that these are the same organizations which, as recently as 2007, were conferring Triple AAA ratings on subprime mortgage paper. Did that work out well for you?

    The real news here is that anybody takes anything these discredited rating agencies say seriously. As my colleague, Randy Wray, has already suggested, the top three ratings agencies — Moody’s, Fitch, and S&P — should all be ignored. In fact, Wray is right to suggest that we should prohibit regulated and protected institutions from using any ratings by this group. Their history of failure makes my beloved Toronto Maple Leafs seem like a veritable hockey dynasty in comparison.

    Why The Moody's Warning About US Debt Is Pure Nonsense

    The fight club is now in session. Have at it boys and girls!
     
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  2. Trajan
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    Trajan conscientia mille testes

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    moodys, fitch, dun and brad et al all now picked this particular time to step up.....they know who their masters are , they got a HUUUUGE pass on that bs investigation into the housing blowup, so you know the deal.
     
  3. Toro
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    Toro Diamond Member

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    You're right. These guys are generally behind the curve. For example, they have been slow to downgrade the PIIGS. They were slow to downgrade the mortgage markets. So, if their track record is any indication, they have been slow to put the US on warning about the debt ceiling. And this is consistent because the ratings agencies are just saying what I am hearing in the investment community.
     
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  4. Leweman
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    Leweman Gold Member

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    You'd think a bad credit rating would come from continually hitting a limit on debt yet always surpassing it. That would make sense though and is not how things work in government I suppose.
     

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