George Washington’s Blog
Tuesday, Dec 02, 2008
As I have previously written, based upon standard criteria, America should lose its AAA sovereign credit rating.
Last night, at an investment talk I attended, the manager of more than a billion dollars in investments said the same thing.
Interestingly, he asked out loud whether Uncle Sam is blackmailing the credit rating agencies.
What does he mean?
Well, the credit-rating agencies committed fraud in keeping the credit ratings for corporations where failing too high for years. (See this and this). The government could easily prosecute them criminally for fraud.
But the government wants to keep its AAA credit rating. And the same companies that fraudulently kept corporate credit ratings too high could keep America’s sovereign credit rating too high, if they have a little . . . incentive.
This article was posted: Tuesday, December 2, 2008 at 5:27 am