When S&P did this back in 2011, the DoJ opened an investigation in to them (regarding their activities in mortgage backed securities), and the CEO resigned pretty quickly as well.
I don't recall any instances of Microsoft hitting a "debt ceiling" and ceasing payments to employees and other parties on a regular basis every few years. Twitter might be a better comparison.
It's amusing, but also intuitive? When we have companies larger than countries, operating globally, it sort of stands to reason they should be safer bets than any one country - just like selling mortgages to thousands vs. a massive one to one person, or anything else in finance.
The investigation began well before the cuts. And the investigation would have happened anyways because in 2011 the House had completed an investigation which pointedly called out the ratings agencies.
And the big problem with the cut was it made no sense. Which was evident from the fact that the US continued to enjoy nearly a decade more of sustained borrowing at nearly 0 rates and the cut itself had no impact.
Last time this happened (around 2008 crisis) didn't that ultimately led to more capital flowing into US? II(vaguely)RC it was a signaling that a big downturn is ahead and that unpredictably meant lots of capital found safe haven in US assets. in retrospect that may be because European banks were in even worse condition and more leveraged than US. IDK what the situation is currently but major international markets like UK/Japan/China all seem distressed at the moment.
So IDK what the material impact for this downgrade ends up being but it does not seems like a big deal.
The republicans have signaled that they intend to get back to government shutdown bullshit.
The dumber members of the caucus seem to have power, so the chances of some kind default are higher. They really want a downturn to help their election chances, and are dismayed that the economy has done well.
Yes, a recent Money Stuff (covering the rumoured/leaked/mentioned indication this may happen) gave that example. It does seem to make it a bit meaningless, because what can you do? They could make it BBB- (or BBb or whatever they use) and still nobody would actually be concerned about their US treasuries. It's a bit weird. I suppose Fitch et al. have to be seen to be following a process.
This rating is just an opinion of some organization. I have an opinion too: I think the US government has a credit rating of AAA.
Why?
- The US government can produce as much currency as it needs to because it's a sovereign country. Hence, there is not immediate risk of default.
- And even if the US government couldn't produce any more dollars, there are plenty of other ways to get hold of the circulating dollars. After all, Congress can pass laws to raise taxes, seize assets, etc.
[+] [-] scrlk|2 years ago|reply
Fun fact: Microsoft has a higher credit rating from S&P (AAA) than the US government (AA+) - https://www.microsoft.com/en-us/investor/faq.aspx
(Fitch withdrew their MSFT rating at the start of the year, but it was also AAA)
[+] [-] bcrl|2 years ago|reply
[+] [-] OJFord|2 years ago|reply
[+] [-] supertrope|2 years ago|reply
[+] [-] rhaway84773|2 years ago|reply
And the big problem with the cut was it made no sense. Which was evident from the fact that the US continued to enjoy nearly a decade more of sustained borrowing at nearly 0 rates and the cut itself had no impact.
[+] [-] steve76|2 years ago|reply
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[+] [-] globalreset|2 years ago|reply
[+] [-] blondie9x|2 years ago|reply
[+] [-] DesiLurker|2 years ago|reply
So IDK what the material impact for this downgrade ends up being but it does not seems like a big deal.
[+] [-] Spooky23|2 years ago|reply
The dumber members of the caucus seem to have power, so the chances of some kind default are higher. They really want a downturn to help their election chances, and are dismayed that the economy has done well.
[+] [-] OJFord|2 years ago|reply
[+] [-] jimmydef|2 years ago|reply
[+] [-] mo_42|2 years ago|reply
Why?
- The US government can produce as much currency as it needs to because it's a sovereign country. Hence, there is not immediate risk of default.
- And even if the US government couldn't produce any more dollars, there are plenty of other ways to get hold of the circulating dollars. After all, Congress can pass laws to raise taxes, seize assets, etc.
[+] [-] archo|2 years ago|reply
[+] [-] metadat|2 years ago|reply
[+] [-] appleflaxen|2 years ago|reply
[+] [-] woooooo|2 years ago|reply
It would take many more cracks in the edifice to make them subject to typical market pressures.
[+] [-] jgalt212|2 years ago|reply