What to do about (public) Debt-Rating Agencies?

["Eric Miller" <ewmiller@xxxxxxxx>]

Hi folks,

How we post-Keynesians (especially those of the "soft-currency economics"
genre) respond to debt-rating agencies grading sovereign public debt that we
claim is (nominally) fully secure?  So far I haven't come across any
discussion on this in any of the post-Keynesian books or sites I've been to.

The only risk I can see that would justify a non-perfect rating is the risk
inherent in any/all of:
1) unexpected inflation eroding the *real* value of debt
2) unexpected changes in exchange-rates altering the value of sovereign debt
denominated in another sovereign currency
3) the country dollarizing or doing something else dramatic to its currency
or its central bank that would remove the sovereign aspect of its debt.

Yet these agencies still routinely give sovereign debt a less-than-perfect
rating without using any of these justifications.  Instead, they typically
grumble about a government not being "prudent" or "living beyond its means"
etc.  Could it be that these institutions are simply wrong?


Regards,

Eric Miller
ewmiller@xxxxxxxx