Skip to content

US Debt downgraded again; from AA+ to AA-

September 17, 2012

It’s not by one of the agencies that I’m most familiar with, but after looking at their funding model, I’m not surprised.

http://www.dailyfinance.com/2012/09/14/ratings-agency-egan-jones-downgrades-us-debt/

Some interesting quotes from the article:

‘  “From 2006 to present,” the ratings agency said in a note, “the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%.”

“In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.”  ‘

This quote discusses their funding model.

“Unlike its larger peers in the credit-rating business, which are compensated by Wall Street companies that issue securities, Egan-Jones is paid by investors. The firm touts this investor-supported structure as a means of avoiding conflicts of interest, which plagued the industry in the run-up to the 2008 financial crisis, when highly dubious securities being peddled by investment banks were often granted triple-A status.”

This is an article that discusses the last downgrade from AAA to AA+ from last year.

http://www.bloomberg.com/news/2011-07-18/egan-jones-cuts-u-s-rating-to-aa-on-spending-cut-concern-1-.html

I’m still always surprised that our nation has a rating this good.  It’s fairly disturbing.

Looks like Moody’s is planning the same thing.  http://abcnews.go.com/blogs/business/2012/09/moodys-warns-of-us-debt-downgrade/

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: