Nate Silver tweets: "France has ~3x the default risk of United States. But S&P rates them AAA."

[Renew Deal]

"Credit default swap prices suggest investors think France has ~3x the default risk of United States. But S&P rates them AAA."

"In 2009, S&P maintained our AAA rating, projecting debt-to-GDP ratio of 90% (http://t.co/9rq5sR9). Now they project ~75% but lowered it."

"After U.S. downgrade, no country with a presidential system has a AAA rating."

http://twitter.com/#!/fivethirtyeight

[Fool Count]

1. No, it doesn't. France can always raise taxes to pay its debts.

Something US is completely incapable off.

[rdking647]

6. and we can print money to pay off ours

france cant

[Fool Count]

12. While this is true in principle (as in US can also raise taxes, in principle),

printing money (just as raising taxes) would require a political decision,
not to mention raising the debt limit again (since new money can enter
economy only via Fed purchases of Treasury bonds). The lower rating reflects
the risks associated with complete paralysis of US political system more than
US actually being broke.

[Major Hogwash]

2. Nate said that? Really? Well, it must be true then.

Nate's a pretty good guy.

[Dark]

3. As Krugman puts it, it's an outrage.

Especially since S&P can't do basic math, and was partly responsible for the whole 2008 crisis.

[banned from Kos]

4. Look at the managment of S&P - once owned by Dow Jones (IIRC)

of the Wall St Journal vs Moody's (once heavily owned by Democrat Warren Buffett).


there is the story.

[indurancevile]

14. s&p is owned by mcgraw hill. ceo, harold mcgraw III.

Harold Whittlesey "Terry" McGraw III (born 1948)<1> is chairman, president and chief executive officer (CEO) of McGraw-Hill Companies and chairman of the Business Roundtable, an association of CEOs of American companies.

McGraw was chairman of the group's International Trade & Investment Task Force from October 2003 through 2006. In that post, he led the task force's efforts to work with CEO groups in other countries and to support free trade agreements.

The group makes up more than a third of the total value of the U.S. stock market, 60 percent of total corporate philanthropic donations in the country and almost half of all private research and development funding in the U.S.

http://en.wikipedia.org/wiki/Harold_McGraw_III

it's this coalition of interests pushing austerity & using s&p to pressure for it.

[nadinbrzezinski]

5. Nate Silver better read that again

IT IS NOT ABOUT THE DEBT BUT POLITICAL INSTABILITY...

[Ruby the Liberal]

8. Epic facepalm indeed.

:thumbsup:

[Ruby the Liberal]

7. The ratings take into account mismanagement

France isn't being held hostage by ideologues who make up 10% of their country.

[banned from Kos]

9. S&P is a McGraw Hill company - not a Dow Jones company

I correct myself in an earlier post.

[Major Hogwash]

11. Probably not for long. They lost all of their credibility tonight.

How can anyone trust someone who makes a $2 Trillion dollar error?

I mean, McDonalds hasn't even sold that many burgers yet, and yet S&P is a ratings outfit!!

[Kablooie]

10. France doesn't have half the government trying to stop any productive economic policies.

[lonestarlib]

13. S&P's purpose is not to subjectively rate political systems or

influence those systems. Their ratings are supposed to be objective, based on numbers.

[indurancevile]

15. "supposed to be" -- but not. have not been.

[Fool Count]

16. As if political systems had nothing to do with investors' chances for

getting their money back. What objective numbers? Those rating are just a very rough guess
derived by putting a bunch of mostly subjective estimates (rough guesses) into some made-up
formula (another rough guess) - garbage in, garbage out. If it was an exact science where
would be no money in it.

[nadinbrzezinski]

17. Actually non predictable politics leads to unstable

systems and the rest is history. They have done this for decades, just not to the US.