In the heady, bubblicious days leading up to the financial crisis, the major credit-rating agencies were asleep on the job — which is exactly what one would expect from a federally protected cartel. They are neither the brightest lights nor most conscientious souls in the financial universe.
So when Moody’s and Standard & Poor start making panicky noises about U.S. public finances — as both did today — then it is time to fire up the klaxons of alarm across the fruited plain. If it’s bad enough to get the attention of these incompetents, it’s bad. From the WSJ:
Moody’s said the U.S., Germany, France and the U.K. still have debt metrics, including the debt affordability, compatible with their triple-A ratings at Moody’s. But all four countries must bring the future costs arising from pension and healthcare subsidies under control if they “are to maintain long-term stability in their debt burden credit metrics,” Moody’s said in its regular triple-A Sovereign Monitor report.
Moody’s noted that measures were recommended by the U.S. National Commission on Fiscal Responsibility and Reform, appointed by President Obama, to achieve a balanced primary budget by 2015, but that there was insufficient support to trigger consideration of those recommendations by the full Congress.
If you think the 2008 financial crisis was bad, ask yourself this: Who is big enough to bail out the United States? Answer: Nobody.
Note to Washington: If you thought the Tea Party looked like an angry mob, wait until you see what happens when Social Security checks start bouncing.