by Roger Koppl
The Christian Science Monitor reports that Moody’s is considering downgrading US government debt. (HT: Mario Rizzo) Is that a credible threat? Moody’s is one of ten “Nationally Recognized Statistical Rating Organizations” (NRSRO) officially recognized by the SEC. Moody’s, S&P, and Fitch are the big three and do most of the rating. Would they downgrade the same entity that ensures their continued monopoly power? Why would they make such a threat in the first place? What is the public choice explanation for Moody’s (empty?) threat?