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The Washington Post had a major article on a threat by Moody’s to downgrade U.S. debt. The article identifies Moody’s as “one of the premier credit-rating agencies.” It also would have been reasonable to identify Moody’s as one of the credit rating agencies that helped to extend the housing bubble by routinely giving investment grade ratings to mortgage backed securities and collaterized debt obligations that were full of bad and even fraudulent mortgages.

Moody’s also has managed to miss most of the major corporate bankruptcies in recent years, giving both Lehman’s and Bear Stearns top investment grade ratings until just before their collapse. It’s record on rating sovereign debt is also not very good. It downgraded Japan’s debt almost a decade ago yet Japan can still borrow long-term at interest rates of less than 1.5 percent. This suggests that financial markets do not have much regard for Moody’s ratings. This would have been useful information to provide readers.