Daily Archives: August 7, 2011

S&P has received some deserved criticism for the timing and nature of its decision to downgrade the long-term sovereign credit rating of the US on Friday. (See for example these excellent critiques by Clive Crook and Paul Krugman.)

Although S&P’s strictures on the path for US debt and the dysfunctional nature of Washington’s recent political games seem valid, what can the ratings agencies actually tell us about the creditworthiness of the US that we do not already know? Very little. And why did they pick the most volatile day in financial markets since the Lehman crisis to deliver their opinions on a debt problem which, by their own reckoning, will play out over at least a decade? Read more