Friday, August 12, 2011

S&P Senior Director Lays Downgrade at Feet of Republicans.

Politico quotes an S&P Senior Director involved in the downgrade decision.
A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.

Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.

“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”
The United States remains the world's largest economy by a significant margin. As a practical matter, isn't it hard for the S&P to justify a downgrade of US debt while France, for instance, remains AAA? Or better still, the Isle of Man and Guernsey? The only reasonable explanation is as listed above, but even so, surely some of this downgrade has to be about S&P seeking some PR. Remember, S&P (along with Moodys) was giving AAA ratings ti all the toxic mortgage backed securities .

Here is the S&P list of Sovereign bond ratings.

(H/T to TPM)


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