Dear Moody's, It's Time To Threaten A Downgrade Of The US

moody's moody

The reputation of the ratings agencies is terrible, and when it comes to sovereign credit they’ve been way behind the market itself in identifying problems.

Here’s a chance for companies like Moody’s and S&P to be of use. They should warn that the AAA-rating of the US is under serious threat over the attempts to use the debt limit as a political tool, as the GOP is pushing right now.

To start, it’s objectively true: When you’re discussing actions that could lead to default, then it’s insane to have a AAA rating.

But beyond that, it’d be useful. Whereas the agencies are fond of making vague, far-off sounding statements regarding the US debt situation (e.g. “If at some point Washington doesn’t shoe credible commitment, blah blah blah, eventually, blah blah blah…”), this would be a substantive message, with timely relevance.

Of course they’ll blow it, because it would be too boat rocking.

Click here for more on why the US should lose its AAA rating >

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