Friday, July 15, 2011
Ratings agencies make life tough for America too
Posted by David Smith at 09:00 AM
Category: Thoughts and responses

The EU criticism of the ratings agencies has been that they have provided a US perspective on the eurozone's troubles. Hence talk of setting up European ratings agencies. There may be a point to that but it would take years for any such agencies to build credibility.

In the meantime, the EU argument is undermined by the fact that the agencies are also making life difficult for America too. S & P has now placed the US on "creditwatch negative", both because of the short-term debt impasse and longer-term worries.

It says (last night): "Today's CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days. We have also placed our short-term rating on the U.S. on CreditWatch negative, reflecting our view that the current situation presents such significant uncertainty to the U.S. creditworthiness." The assessment is here.