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.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.