What about Moody´s?

I bet that they will.

They have been kicking around the idea now for a while. They came out today and said some real changes have to occur or they will downgrade also. And by changes, they mean cuts. They think the current set of cuts is complete bull.

You have to remember that Moody's is owned by Warren Buffett, who is basically Obama's right-hand man when it comes to finance. There's no way they were going to be the first to downgrade. We cover this in tomorrow's NSFW. But now that S&P is making Moody's look like assholes for not downgrading, you can bet your ass that the downgrade is coming.

And it should. Let's be serious. Is the US in the same financial position it was a decade ago? Moody's is doing investors a disservice by maintaining a bullshit rating on the US.

Eddie,

I think Moody's should be more afraid to downgrade anything after Warren Buffett saw S&P put a Negative Outlook on Berkshire Hathaway.

OP, it's pretty much certain that Moody's will make the move to cut the US AAA rating. From what I have seen, from what I've learned in discussing how Moody's operates with former senior employees, and the way ratings agencies have operated in the past, it can be reasonably assumed that when one ratings agency moves, the others tend to be in lock step with the guy who made the first move.

I don't think it's a matter of will but rather a matter of when. There is no way to bipartisan landscape of US politics will ever come up to an agreement that can make a clear impact on the current debt situation.

Although I don't completely agreement with his words, the sentiment in this quote by Jim Rogers somewhat rings true at the moment.

http://dealbreaker.com/2011/08/jim-rogers-just-give-up-already/

What kind of Decision Moody´s makes I hope that Moody´s will decide without Buffett´s influence.

Warren Buffett tries to calm the market down by claiming that U.S. still deserve AAA.

Massive, the question here is whether it really does deserve to keep its AAA Status, not when will Moddy's come out with their decision.

America doesn´t deserve to keep its AAA Status.

What is your thought?..

Just think about it: Although America doesn´t deserve that, Moody´s stays cool and doesn´t downgrade that. This could calm the market down for the short term, but this problem would come back. It seems to be impossible to find an arrangement between republicans and democrats.

As concerning the stability of the world economy for the long term, downgrading would be the better solution.

Massive, then you have the argument that Moody's was influenced by Buffet, who as Eddie pointed out, both owns Moody's and is Obama's cheerleader. At which point, Moody's becomes the target of questionable decisionmaking creating a situation for them akin of MBS Circa 2007 and their inability to rate securities properly.

As to my thoughts on the AAA status, It was never a matter of does or does not deserve, but a matter of when we would lose it. Between Fed Rates being at their lowest, QEx, a lack of a recognizable recovery led by non-stimulus related measures, and the fact that we have a debt ceiling of 16.7 Trillion Dollars, coupled with our political inability to actually cut spending in meaningful ways, I'm going to say that we were heading in that direction for the last two years and was kinda confirmed by the 16.7 Trillion Dollar debt ceiling we have.

Even though they're far far FAR from perfect, the aim of rating agencies is to give an unbiased judgement of the credit worthiness of sovereigns/companies.

It's not their job to calm the markets. They shouldn't be pressured to keep the rating because Buffett or the US Government want them to. I actually applaud S&P for having the balls to lower the rating...

Wow... Edit Locked out of my own post. I gotta correct myself here, but it's not debt ceiling of 16.7 Trillion, it's debt ceiling of 14.7 Trillion Dollars... Sorry... was not paying attention to that when I was typing.

buffet claimed two days ago that we deserve a quadruple A rating. though i doubt his opinion will have much effect on moody's. they're surely downgrade.

http://www.bloomberg.com/news/2011-08-06/buffett-says-s-p-s-downgrade-m…

i'm not sure what he's thinking

Moody's has to downgrade it. Prudence is the raison d'etre for ratings agencies and if Moody's doesn't downgrade they will eventually be viewed as "the less prudent" ratings agency. I'm sure Buffett's missed call log is filling up with guys named Obama though. Question is what effect will the Moody's downgrade have on the markets. Obviously it would be more fear than substance, especially since S&P already jumped on it. Nevertheless I wonder where it will send the Dow/S&P. I'm calling Dow 9000 as a bottom, 8500 if things really deteriorate this week.

Given that the report from S&P was a complete editorial (right or wrong), I can see a strong case for Moody's re-reaffirming the Aaa and publishing a contrary editorial (Buffet/ownership's opinion aside). I don't know the ratings methodologies for sovereigns under either agency but the excerpts S&P cited in their downgrade report are highly subjective, so Moody's could easily take the other tack in order to get some publicity.

At work today, only saw article after article about Moody's and Fitch's choice to uphold the rating ... did something change I didn't see?

^^ I think I saw this too. Thought Moody's reiterated that they were not going to downgrade.

As Gross said on Bloomberg on Sunday night, S&P showed some spine by downgrading the US. It's about time the others did too.

Let me start by saying that this last weeks' events are causing a change in my employment situation in a way that throws off my plans by years. I'm out of my mind enraged 24/7 right now that a judgement call that could have been made years ago, or waited for years, is being made now. There's simply nothing I can do, and so my brain has been chewing on this since Friday morning when the rumors started. I'm basically rebelling against the consensus, but I also see some very serious flaws in the logic driving what I'm "supposed to agree with" no unlike the logic telling us that there were nukes in Iraq a decade ago. For anyone toying with the misguided notion of calling me a liberal, actually put on your thinking cap, suspend your partisan mental vise, and take an apolitical analysis into consideration. Either that or go back to finishing your 2nd grade homework. It's really up to you.

So here we go.

I'm sticking to my guns and calling political bullshit: the timing is too perfect for it not to be. No one in their right mind is going to say the debt isn't bad, but at the same time, it's not an accident that the issue is being made of it 14 months before the next election. This is Obama's hurricane Katrina - he didn't cause it, and he sure as hell didn't do enough.

But there's a difference: one was an act of nature, and the other was an act of man. When the GOP has become so irrelevant that Trump briefly holds more influence than the former VP contender, you know that they are seriously scraping the bottom of the barrel. This was all that's left and while I AM a fan of the budget finally being addressed, this is a piss poor way to do it: an American company dinged the nation's credibility. Un-fucking-believeable. And rhetorically, who the fuck are they? No, really....think it over.

S&P could easily have done what they frequently do: fake it. ANYONE who at this moment thinks they are beyond reproach should maybe go back over the last year of my posts where I trash ALL of the ratings agencies with abandon and I'm not the only one. Many people were in agreeance....but now, suddenly, their judgement is infallible. Bullshit. They didn't perform their function prior to the MBS blowout and now their judgement is debatable, plain and simple. I would also question the political leanings of the people controlling the company, but I just don't currently know enough to publicly allege collusion with the GOP, but it sure looks that way to me.

Honestly, if Buffet has an ounce of fight in him, he'll keep the ratings of his own agency where they're at to make the point that yes, the agencies actually DO their own research and that they are not the confederacy of dunces I think they are. Seriously, prove me wrong: I think that the ratings agencies are a bunch of sheep, hacks, and snake oil peddlars. For real: America can't pay it's debt? I call bullshit.

This could have waited until the economy wasn't so fragile. But it was done now, and this will go a long way towards ensuring that there's no recovery before the next election. Again, the recovery concerns me, not which public official tries to take credit for something that happens on its own. I DO find it telling that every republican I know (and t party closet things) were positively delighted by Obama being made to look like an ass on Friday night.....the implications for the country or the markets coming in a distant second. The opposing party is going to overplay this as much as possible. This gives Obama a full year to figure out a solution, as well as come up with a rhetorical way around actually fixing anyting, and I hope for the good of the company is the first and not the second. But that's not the focus of this post.

I will concede this: A. This may just be the kick in the ass the US needs to get it's ducks in a row. Perhaps I am generally too civil and maybe niave to expect ANYONE in power to act in the interests they are elected to serve rather than their own selfishness. Live and learn. B. If I offend anyone with this post, please keep in mind that my point is to illustrate what I honestly see to be the case: if it turns out I'm wrong, then so be it. Live and learn. C. I'm tempted to question my career choice but this is life, shit happens. One thing I will take away from this: life is unfair, and now I am too. Live and learn.

@UFO S&P never said the US couldn't pay their debts, would default, or is even a bad credit risk. They merely said that the US isn't the same country it was economically 5 years ago, 10 years ago, or 50 years ago which is plain fact and isn't even debatable.

If Moody's doesn't follow suit, and very soon, they're the ones that are gonna look like political puppets.

^^ 5 to 10 years ago, US was essentially in the same situation debt wise) that it is today. They should have downgraded awhile ago, or decided to wait a little while for the current market dip to be over with.

I happen to know the people who makes these decisions in Moody's. I used to work there - now in IBD at a BB.

There is plenty of talk about who influences the ratings agencies - but to be honest, in my 5 years of working there, never once was there any outside influence in any of the over 1000 rating committees I attended or presented at.

I can tell you the sovereign risk team at Moody's is a group of stand-up individuals who don't give a crap what any 10% shareholder thinks. It's determined by a large committee of both junior and senior people, and each vote counts equally. That means mine counts as much as a Managing Directors.

Also lets be clear a Aa1 is pretty much as good as a Aaa. The US has incurred leverage beyond any means of repayment, and we can all agree the financial risk associated with meeting these obligations has increased in the past 10 years.

And I agree - a lot will happen over the next years in terms of policy. And if the US is to enact long-term revenue and spending solutions, it could look as if S&P moved too soon

Have you seen what's happening to S&P?

Unless their interested in moving their HQ to China, NO.

Have you seen what's happening to S&P?

Unless they're interested in moving their HQ to China, NO.

Or at least not soon.

To be honest, as livid as I am about the whole shitshow of political posturing that even got us here in the first place, be real. A-1 is for all sense and purpose a 3A rating. Given that the two factors to a rating are a) ability to pay debts and b) willingness to pay debts, it makes perfect sense to get a downgrade given how Congress left only a toe on the right side of the brink and didn't even really manage to do anything more than put one leg back from the edge. We have proven our willingness to be absurd. Political expediency was placed above national, perhaps global welfare.