Standard and Poor down graded the United States credit from AAA to AA. With all the debt ceiling talk this may sound right but lets really think about it.
The country being downgraded one letter is like you being dropped from a 850 credit score to a 700. Not bad but not as good as you were for the last 97 years. Now I am not sure about you but I know if I had the power to print my own money at will, like the U.S., I wouldn’t be the slightest risk for reneging on my debts.
Yes that’s right. Standard and Poor is saying there is a slight risk that the United States of America will not pay it’s creditors. This is ridiculous. All we have to do is print more dollar bills and send them off in a really big envelope.
Would you be a risk to your loan officer if you could do that?
I didn’t think so.
So my advice to Standard and Poor is; go back to manipulating mortgage securities for the benefit of your clients and leave the country alone.
Consider what Nobel Laurelate Joseph Stiglitz, economics professor at Columbia University in New York observed:
“I view the ratings agencies as one of the key culprits. They were the party that performed that alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies.”
I think Professor Stiglitz had it right and anyone who listens to Standard and Poor should consider the source and their past actions.