We’re about to endure another credit downgrade, this time from Egan-Jones. The reason? I can give you the short answer in just two words: “Ben” and “Bernanke.” Here’s the longer answer:
The latest round of quantitative easing announced Thursday by the Federal Reserve will almost certainly trigger a rating downgrade by Egan-Jones.
Already the rating agency had warned on Wednesday when it affirmed the U.S. rating at AA that “QE3 will likely trigger a negative action.” Given that the outlook is already negative (AA-), a downgrade to AA- would be a logical next step for the rating agency.
“We are not receiving QE3 positively,” Vice President and co-manager of the ratings’ desk Bill Hassiepen told MNI Thursday, while the fiscal situation is a “nightmare.”
Repeat after me: Printing money never ends well.