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Deal Or No Deal, US Downgrade Still Likely
Would (another) US downgrade matter with the country poised to avert a worst-case debt ceiling outcome?
As is the case with so many other pressing questions facing market participants in 2023, the answer is "yes and no." "Yes," in the sense that a downgrade would speak (loudly) to an ongoing, multi-faceted social crisis. But "no," in the sense that if the US doesn't actually default, no one would shun Treasurys in a downgrade scenario -- instead, investors would likely buy them.
After putting
Sovereign debt ratings are a really bad concept. Investors are far better off in that segment doing their own research.
Downgrading US debt is a meaningless exercise, and that does nothing but feed the trolls. What’s even the point?
I’ll be very curious to see how the votes shake out though, but I would not be surprised to see a mix of votes on both sides of the aisle. Yeah, the debt ceiling is stupid, but wouldn’t a bipartisan debt ceiling bill refute the notion that Congress is completely falling apart? This is one of those instances where you might know negotiations worked because both sides are unhappy at the end but still made a deal.
To me, this is another example where Biden is continuing to find ways to be far more effective than he has any right to be. His presidency is turning out to be far more consequential than I could’ve imagined and I wish him good health and another 4 years. Let’s hope voters reward him with a blue congress again, but I’m not holding my breath when it comes to the senate.
And I know no one asked, but I think Biden’s ultimate legacy will be how much faster his policies will help accelerate the transition to clean energy. In a few years, we’ll look back at the trend in our energy production and usage and be surprised how quickly we made progress under his administration. It’s easy to listen to the doomsayers but there are good things happening as well. Don’t be surprised if Trump loses even worse in 2024.
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