Egan-Jones, a ratings firm, has yet again cut the credit rating of the US this past week. This is the second time since Obama has been in office. It cites the failure to cut the federal debt. For those of you unfamiliar with the importance of the US credit rating, let me take a moment to explain why this is such a big deal.
A credit rating is issued by a credit rating agency, and just like the credit scores of individuals, it basically describes risk, and the likelihood that they will repay the debt it takes on. For consumers, a lower credit rating means higher interest rates. For the country, it also means higher interest rates, a higher cost to insure the debt against default (think of the PMI cost to insure your FHA loan), and market decline.
When Egan-Jones first downgraded the US credit rating in April 2012, the SEC voted to take action against very old (years old) allegations of inaccuracy of Egan-Jones. A clear case of attempted intimidation, Egan-Jones stood firm and indicated they will not be swayed by such tactics.
With such cuts to credit rating (including the August 2011 cut by one of the top 3 agencies, S&P, where in the Obama Administration began criticizing the company) when will Obama get the hint? His policies have failed the United States and these downgrades will affect the US for years to come.