So the indebted US government has just announced that it will load up in billions if not trillions of dollars of debt in the form of CDOs and MBS from the private sector onto the US treasury account. Of which most of the debt is rated subprime and Alt-A. In technical terms it is rated mostly in the "junk" category. It seems that if S&P, Moody's and Fitch have any credibility left in rating default risk they sure as hell better downgrade the US as there is no way in hell it is any longer +AAA rated. The current US fiscal landscape looks worse than some banana republics (excluding Zimbabwe). I can imagine that there is some backroom arm twisting going on at the rating agencies not to downgrade the US. As the consequences of doing so would see the dollar fall and i-rates leap. But at the end of the day "you reap what you sow". Lax lending along with excess liquidity and no fiscal discipline has created this situation.
people just don't get it. when you have the worlds strongest armed forces with 50% of the worldwide defense budget, and your currency is the world reserve currency, you hold the world hostage both financially and militarily.... your credit rating is always AAAAAAAAAAAAAAA
if moodys and fitch even think of removing the AAA rating the following will happen 1) a whole alphabet soup of govt organizations will rain down terror on moodys and fitch, create a whole bunch of bogus charges and some real stuff (like not rating subprime debt appropriately during the housing bubble) 2) all the senior employees will end up in the big house 3) the new management will "get the idea" you will never see US govt rating anything other than AAAAAAAAAA
"You know, gentlemen, that I do not owe any personal income tax. But nevertheless, I send a small check, now and then, to the Internal Revenue Service out of the kindness of my heart." - David Rockefeller, before a Congressional Committee
What's your point? Rome didn't starve to death... In fact, I do believe they are the ones that invented the phrase "bread and circuses".