Originally posted by dryhump
Newsflash, the credit rating is very likely getting downgraded even if they raise the debt ceiling.
You might be right—
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NEW YORK (TheStreet) -- Ratings agencies Standard & Poor's and Moody's Investors Service(MCO) are attempting to get tough in the wake of the financial crisis, hoping to rehabilitate their seriously bruised reputations, say market watchers.
"The ratings agencies are engaged in some sort of campaign to restore their credibility," says Arturo Cifuentes, a professor at the University of Chile and former Moody's analyst who has testified before the U.S. Congress about the role of the ratings agencies in the subprime crisis. He points to recent threats to downgrade the U.S. sovereign rating, something he says "they should have done a long time ago," as a prime example of this campaign.
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Regardless, Cifuentes believes ratings agencies' efforts to improve their reputations will prove fruitless. "In the PR arena their image is probably broken beyond repair," he says.
http://www.thestreet.com/_yahoo/story/11203758/1/ratings-agencies-get-tough-wreak-havoc.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
EDIT: I am not a fan of
theStreet.com, and generally think of them as an internet tabloid.
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Regardless of the rating agencies, the real question is whether, and how severely, the market downgrades government debt. And, as ATY noted, that may have more to do with whether or not the government defaults on paying
any of their accounts payable.