Good comments today from Warren Mosler. Given S&P’s disastrous handling of this situation, Moody’s has an opportunity to save some face and look like the more credible agency here:
“This is an opening for Moody’s to gain a competitive advantage over S&P.
Moody’s can announce that whereas any issuer of its own currency can always make nominal payment on a timely basis, ability to pay is absolute and beyond question for the US government. Therefore, when reviewing the US government’s credit rating, only willingness to pay is a consideration. And given the recent Congressional proceedings regarding the debt ceiling, an entirely self imposed constraint, Moody’s is putting the US on notice with regard to willingness to pay.”