Egan-Jones may not be Moody’s or Standard and Poor’s, but this should have been a huge story. In fact, it would have been front page news for a week if a Republican were in office.
Egan-Jones Ratings Co. said Friday it downgraded its U.S. sovereign rating to AA- from AA on concerns that the Fed’s new round of quantitative easing, or QE3, will hurt the U.S. economy. The ratings agency said the Fed’s plan of buying $40 billion in mortgage-backed securities a month and keeping interest rates near zero does little to raise GDP, reduces the value of the dollar, and raises the price of commodities. “From 2006 to present, the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%,” Egan-Jones said in a note. “In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.”
The United States had its AAA rating from 1917 until 2011. It only took us from 2011 to 2012 to have our rating lowered again. If you’re not freaking out, then you’re not paying attention.
Oh we’re freaking out. The problem is that the people who desperately need to read this never will.