Moody by name, moody by nature, who'd trust a ratings agency?

So, no great market reaction to the downgrade of France by the ratings agency Moody's yesterday.

France said its economy was sound and reforms were on track after credit ratings agency Moody's stripped it of the prized triple-A badge due to an uncertain fiscal and economic outlook.

Monday's downgrade, which follows a cut by Standard & Poor's in January, was expected but is a blow to Socialist President Francois Hollande as he tries to fix France's finances and revive the Euorzone's second largest economy.

"The rating change does not call into question the economic fundamentals of our country, the efforts undertaken by the government or our creditworthiness," Finance Minister Pierre Moscovici told a news conference on Tuesday.

http://uk.reuters.com/article/2012/11/20/uk-france-moodys-idUKBRE8AI17I20121120


I suppose some might say that these rating agencies cannot win, after all, they were the ones that gave triple A ratings to the toxic debt that was so freely available and contributed massively to the financial crash that supposedly no one could see coming , so what do they know? If they had any reputation it was tarnished by their actions back then, so perhaps they are trying to make up for it now?

So far the UK has avoided the moody ratings agencies.

The US may not.

The Unites States could see it sovereign triple-A rating downgraded next year if it fails to address its upcoming fiscal problems and reduce the $1 trillion deficit, Fitch, Moody’s and the S&P, the three US major rating agencies warn.

­As the US is going to reach the federal debt limit of $16.39 trillion by the end of 2012, experts are concerned the authorities haven’t provided a sustainable strategy to reduce borrowing.

"The rating is in the hands of policymakers," said John Chambers, Chairman of Standard & Poor's, the agency that was first to downgrade the US in August 2011.

The agencies said they will closely watch debt ceiling talks next year, as the raising of the debt limit is likely to result in a downgrade.

The so-called ‘fiscal cliff’ looming in early 2013 is another major threat for the US financial stability and therefore its rating. The ‘fiscal cliff’ of conjoined tax raises and spending cuts, which come into force in January, is expected to result in a 5% GDP tightening and a probable slow down of the economy.

"If no budget deal is reached in the early part of next year and the debt trajectory just continues to rise … then we'd be looking at a downgrade of a notch to Aa1," Bart Oosterveld, Managing Director at Moody's agency told Reuters.

http://rt.com/business/news/us-rating-warning-cut-773/

Right now Moody is a good name for them, just a pity they were a bit too high on irrational exhuberance and not moody enough before 2008.