THE UNIMPORTANCE OF THE DOWNGRADE OF UNITED STATES SECURITIES.

THE UNIMPORTANCE OF THE DOWNGRADE OF UNITED STATES SECURITIES. Two comments about the downgrade of United States securities by the Standard and Poors rating agency. First, it was unusual that the downgrade was followed by a dramatic rise in the prices of United States securities. The price increases were probably accounted for by fears about Europe and economic news that seemed bad for economic growth, but it still in the opposite direction from what the rating change would suggest. Second, rating agencies probably have little importance for United States securities. Rating agencies matter more when they can provide analysis that is not generally available. A lot of people have opinions about United States securities, and information about the credit of the United States is widely available. The wisdom of the market incorporates all these opinions. One rating agency is but one of many voices in the market.