Substandard & Poor; America's Downgrade  

Oleh:

[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 400 no. 8746 (Aug. 2011), page 8.
Topik: Credit Ratings; Rating Services; Sovereign Debt; Bonds; Government

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.67 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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It was a humbling moment for America, and the decision by Standard & Poor's (S&P) to strip the country of its triple-A credit rating on August 5th came at a particularly sensitive time. Furious Obama administration officials immediately attacked the ratings agency--and the criticisms increased on August 8th, the first trading day following S&P's announcement, when the Dow Jones Industrial Average plummeted by 5.5%. This matters for the downgrader as well as the downgraded. The reputations of the ratings agencies are still stained by their gross overstating of the quality of mortgage-backed bonds before the credit crisis. Credit ratings are useful for investors: if the likes of S&P did not exist, the market would invent them. No matter how much Barack Obama huffs and puffs, a ratings agency's job is to rate bonds, including government ones, and to speak out when it thinks the least risky asset in the world has become riskier. As flawed a messenger as S&P is, its message should still be heeded. Above all, S&P's verdict is based on the uselessness of America's politicians: both their inability to deal with the budget and their vividly displayed political brinkmanship. S&P argues that America's policymaking has become less predictable and its finances less manageable. This is not how an AAA-rated country behaves. S&P did America a favour by pointing this out.

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