[lbo-talk] S&P downgrades U.S. debt

[Max Sawicky]

It's worth noting unless somebody already said this that Japan was rated
lower than the U.S. but could also sell debt at lower interest rates.  So
'the market' doesn't really give a crap about these ratings.  They have some
impact on institutions with fixed rules about what they can own (e.g.,
pension funds), and of course there is the political fall-out.

On Sat, Aug 6, 2011 at 10:28 AM, Eric Beck <ersatzdog at gmail.com> wrote:


> On Fri, Aug 5, 2011 at 9:33 PM, Dissenting Wren
> <dissentingwren at yahoo.com> wrote:
>
> > How seriously should we regard S&P’s warnings about the long-term fiscal
> instability of U.S. public finances?
>
> In his book Capital Rules, Rawi Abdelal concludes that ratings
> agencies' rankings are not the leading they are usually assumed to be.
> Even though people like to bitch about the agencies' powers, he says
> what they largely do is confirm the markets' biases and thinking; they
> are an indicator, not a former, market opinion.
>
> This doesn't really change anything, no? Where are investors going to
> go? Europe? China? ha.
>
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