An Observation on the Coverage of the S&P Downgrade

August 8, 2011

Comments

One thing I noticed in the Sunday show coverage yesterday was that no one seemed to mention that only one of three main bond ratings agencies downgraded the US. It was as if the only source of bond ratings was Standard and Poor’s and that everyone else did not exist.

I watched substantial portions of Meet the Press, Fox News Sunday, and This Week.

Indeed, it seems that most coverage in general seems to ignore the fact only S&P downgraded the US although certainly a lot of print (I use the term loosely) have mentioned the Fitch Group and Moody’s.

I suppose it just sounds more dramatic to focus on S&P and it underscores a problem with news coverage (and, quite honestly, even blog writing): full explanations take up time and space.

4 responses to “An Observation on the Coverage of the S&P Downgrade”

john personna

August 8, 2011 at 8:44 am

Even more importantly, there are only a “big three” from the US perspective.

I did drop several reference to Dagong for you, son.
Dave Anderson

August 8, 2011 at 11:00 am

And then we look at the reaction of the US bond market this morning — interest rates on long term bonds went down (substantially) so the bond markets are shrugging off the S&P and worried about long term growth prospects far more than creditworthiness.
john personna

August 8, 2011 at 11:11 am

@Dave Anderson:

Yeah but ;-), it might just be showing that there are worse things in the world than AA+
Max Lybbert

August 8, 2011 at 11:53 am

The downgrade may make sense. However, it was based on well-known public information; the kind of information investors were already looking at when deciding whether to put money in Treasuries. That is, the price of Treasuries was already adjusted for the risk of default.

To put it simply, interest rates on US bonds are going to be about the same, regardless of whether we get zero, one, two or three downgrades.