Hi j-t,
I see that US governance is a disfunctional mess at present and that this is a significant fact in S&P's assessment. It's up to them how they arrive at their rating and they appear to me to have this fact correct.
I am not so concerned about whether some other folks at the ratings agencies have made mistakes. That doesn't seem to me to be an adequate reason to disregard the folks who are making the assessment of the situation in the US.
I don't see an issue in the short run - interest rates are very accommodating, people have little choice about buying US government bonds, the US can afford its debt.
I agree with S&P that the long run view of the US is bleak if something isn't done to slow the growth of certain kinds of expenditure eg medical and military costs.
I am not so impressed by the US government shooting the messenger. The difference in the calculation method the US government is promoting doesn't result in a material error.
I'm glad the ratings agencies are trying to assess US creditworthiness in a way that doesn't offer preferences to powerful countries. I think anyone thinking about this should check their patriotism at the entrance to the discussion.
Even so, I think few folks are going to change their behaviour due to the S&P report. Hopefully, sensible people see this as a tool to try to make the political conversation more constructive. More Tea Party economics and the rating is going to plummet. It might have been a lot worse.
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