Every country that has hit 100% of it’s GDP in debt has defaulted – or will.
Every other country with debt issues such as have been downgraded, and rightfully so. The only thing that prevents this right now may be reserve currency status and the fact that all other currencies suck worse than the Dollar right now.
The issue aside from the fact that the value of credit agency ratings may no longer represent investment expectations, is the issue that it is frightfully expensive to lose a credit rating as a Nation. Not to mention, tack on that added interest to the debt, and lenders may no longer find US currency, bonds, and securities worth the risk if they see reckless accounting practices.
On the flip side, maybe that added burden may force politicians to curtail their vanity and cull the budget properly but I highly doubt it.
If you are going to have a ratings agency, would it not be prudent to rate Countries on the worth to GDP level minus government expenditure?
It was done with Russia which is one of the reasons for Putin’s quip. Greece, Italy, Spain, Ireland, Portugal, all at various levels. After a point they are junk status. Junk status is when you lost your shirt.
11/18/11 – This will be a downgrade. Democrats, you SUCK.