I wonder if it would be far-fetched of me to suggest that these credit rating agencies could just be run by Republicans who decided to do all this to get Obama out of office...?
Yeah that's too far fetched.
But undoubtedly these decisions are heavily politicized, particularly within the three main ratings agencies. The head of the division responsible for rating sovereign bonds at S&P resigned abruptly not longer after they downgraded the US. A confluence of factors including the botched announcement (trillion dollar mistake gave the Treasury a talking point), political backlash, a big stock market crash following the announcement which undoubtedly hurt their clients, and worst of all being contradicted by the bond markets and the swap markets, all must have hit them pretty hard. Just the absurdity of having France rated AAA while the bond and swap markets were giving it a much, much bigger credit risk than the US, was way too glaring. Thank goodness we have more than the rating agencies to tell us what to think now-- or investors would be up sh_t creek.
Makes sense.
This credit downgrade was definitely more symbolic than anything, but this alone makes the outlook for next week's stock market gains not so good. I'm actually surprised this story isn't getting as much attention than the last time.
