US Debt And Moody's Ratings

The US holds a huge amount of debt as we know. Moody's consistently rates the debt as AAA. That is the excellent rating which means that the debt is good, very good. Moody's also graded the sub prime debt that was sold around the world resulting in the huge recession as very good debt as well. What's the deal. Moody's credibility is suspect here.

Moody's may not necessarily work independently of Wall Street. Wall Street would like to see the privatization of social security. A downgrade in the rating of US debt would be a major step towards forcing that privatization.

This is huge and needs to be well understood. The recession was not enough essentially. The bank bailouts were not enough. The low interbank lending interest rates are not enough. These guys want the huge cash that is social security and the picking time is ripe, the time is now. We do not want the privatization of social security.

Guardian: What explains a Moody's change?

Moody's and the other bond rating agencies have featured prominently in the build-up to the financial crisis. These agencies gave investment grade ratings to complex financial instruments filled with subprime mortgages and other bad assets. These ratings allowed Goldman Sachs and other investment banks to sell this trash around the country and the world, ensuring that the effects of the collapse of the housing bubble would reverberate throughout the financial system.


This record must be kept in mind when considering the possibility of a Moody's downgrade of US government debt. It is no secret that many on Wall Street would love to see social security and Medicare cut back or even privatised.


All banks, including giants like Citigroup and Goldman Sachs, hold huge amounts of US government debt.


This means that if Moody's were to downgrade the government's debt, to be consistent it must also downgrade the debt of Citigroup, Goldman Sachs and the other big banks. If Moody's downgrades the government's debt, without downgrading the debt of the big banks – or even threatens to downgrade the government's debt without also threatening to downgrade the debt of the big banks – then it seems more likely that it could be acting in pursuit of Wall Street's political agenda than presenting its best assessment of the creditworthiness of the US government.