Why S&P downgraded and Moody's didn't
From Felix Salmon:
An S&P ratings seeks to measure only the probability of default. Nothing else matters — not the time that the issuer is likely to remain in default, not the expected way in which the default will be resolved. Most importantly, S&P simply doesn’t care what the recovery value is — the amount of money that investors end up with after the issuer has defaulted.Moody’s, by contrast, is interested not in default probability per se, but rather expected losses. Default probability is part of the total expected loss — but then you have to also take into account what’s likely to happen if and when a default occurs.
Comments
S & P is fully aware of O'Malley and crew kicking the structural deficit down the road in this last legislative session. Cooking the books, sooner or later, the auditors will catch you. MD is on the brink. O'Malley math is based on pie in the sky projected incomes. Reality is going to smack Marty & Peter Franchot right between the eyes.
Posted by: GHCinNottingham | August 10, 2011 12:55 PM
S & P is fully aware of O'Malley and crew kicking the structural deficit down the road in this last legislative session. Cooking the books, sooner or later, the auditors will catch you. MD is on the brink. O'Malley math is based on pie in the sky projected incomes. Reality is going to smack Marty & Peter Franchot right between the eyes.
Posted by: GHCinNottingham | August 10, 2011 12:56 PM
Really? I guess that's why they didn't downgrade Maryland then?
Posted by: IPFrehley | August 10, 2011 7:22 PM