Greg Ip

Articles by The Economist’s U.S. Economics Editor

America’s downgrade: Substandard & Poor

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The messenger may be flawed, but the United States should take heed of the message

Aug 13th 2011 | from the print edition

[Greg Ip]

IT WAS a humbling moment for America, and the decision by Standard & Poor’s to strip the country of its triple-A credit rating on August 5th came at a particularly sensitive time. Furious Obama administration officials immediately attacked the ratings agency—and the criticisms increased on August 8th, the first trading day following S&P’s announcement, when the Dow Jones Industrial Average plummeted by 5.5%.

Was S&P justified? This matters for the downgrader as well as the downgraded. The reputations of the ratings agencies are still stained by their gross overstating of the quality of mortgage-backed bonds before the credit crisis (see article).

The entire article is linked here.


Written by gregip

August 11, 2011 at 10:26 am

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