An Illustration Of The Uselessness Of The Credit Rating Institutes
Country number 1, who has a budget deficit of nearly 10% of GDP, a government debt of nearly 100% of GDP, a large current account deficit and 1% growth. Or country number 2 that has a balanced budget, a government debt of 7% (no, the absence of a zero behind the 7 is not a typo) of GDP, a current account surplus and 8% growth.
Most people would probably pick country number 2, but not the credit rating institutes. They give country number 1 (the United States) AAA or AA+ ratings while they give country number 2 (Estonia) AA-, A+ or A1. The way of thinking that gave AAA rating to packages of subprime mortgage backed securities is clearly still alive and well at the credit rating institutes.
Why anyone thinks the opinions of credit rating institutes has any value at all is beyond me.