It was good to see this morning the markets were not rattled by the recent S&P downgrade of nine European Union countries. Both Dow Jones and the S&P 500 opened at around what they closed at on Friday and are actually doing better today. Some analysts were worried the downgrades would cause uncertainty in the market and have a negative affect on the U.S. markets. However, when the markets opened bond sales went smoothly for the downgraded countries.
This is a good sign for our economy by showing that shocks to the EU do not necessarily mean consequences for us. However, I am also glad to see people are not listening to rating agencies like S&P and Moody’s as all knowing entities. Let us not forget those exact rating agencies played a big part of the financial collapse of 2008. They were the ones who gave Junk bond and securities high credit ratings that were destined to fail. It was because they messed up their ratings that people bought losing assets. So it is good to see we have not forgotten the role the rating agencies played in the recession.