Sleeping Easy Despite Moody's Downgrade Threat
Hmmn… There must have been change in the Matrix. We experienced a major deja vu this morning.
It began when we read this headline from The Wall Street Journal: “S&P, Moody’s Warn on US Credit Rating.”
“We have become increasingly clear,” the Journal quotes a Moody’s statement “about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the US, the likelihood of a negative outlook over the next two years will increase.”
Translation: If the boneheads in Washington can’t figure out how to raise revenue or cut spending, or both, Moody’s is going to write a strongly worded letter.
Ooooh, scary. And yet…it sounds so…familiar.
Just for the heck of it, we spent three minutes with Google and turned up news articles with Moody’s alone issuing warnings on these dates…
What accounts for the six-month dry spell in the second half of last year? We admit we do not know. But a better question might be when do they actually grow a pair and pull the trigger on a downgrade?
Who are we kidding? This is the same bunch who just a few short years ago slapped AAA ratings on mortgage-backed securities worth little more than premium toilet paper.
“Before I go to sleep at night,” John Whitehead, the octogenarian former chairman of Goldman Sachs said during the depths of the Panic of 2008, “I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of US government bonds.”
Sleep easy, Mr. Whitehead. That’ll only happen after the default is complete.