Krugman: I have had a lot of downbeat stuff to say about Irish policy and prospects. But having their position worsened by a warning from S&P is cause for justifiable anger on their part.
For the fact is that the rating agencies, S&P very much included, have been terrible on sovereign debt. There is, in fact, a disturbing contrast between their willingness to classify highly dubious private securities as AAA and their willingness to classify governments as probable deadbeats on very weak evidence.
Let’s recall in particular that both Moody’s and S&P downgraded Japan in 2002. How’s that been going?