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Saturday, August 06, 2011

Why S&P Downgraded

Economist's View: The S&P Downgrade: Is the Sky Falling?: "S&P may also be covering itself after doing so poorly prior to the financial meltdown. If S&P leaves the outlook at AAA and problems emerge down the road, it's credibility will be even more shot than it is already and likely irreparable. Missing another big problem is essentially a death sentence. But if it downgrades the debt and nothing happens, it can claim its warnings and the downgrade were key factors in persuading people in both the public and private sectors to take steps to avoid disaster. It's Chicken Little claiming that his warnings stopped the sky from falling."

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