They may not have any credibility, but they still effect the markets. Moody's has put every single MUNI in the country on negative watch.
The Federal government is still AAA, but every municipal debt issuer is now suspect and shaky according to Moody's.For the first time ever, the ratings agency placed all munis on negative outlook, a precursor to potential downgrades. Historically, the agency looked at munis individually and considered them to be too diverse to make blanket statements about.
But it seems overspending and the hollowing out of the revenue base is a nationwide phenomenon affecting cities and states everywhere.
So why does the federal government still get a free pass?
cutting social services like mad
Just read that the "Stimulus" will only help out with 40% of the budget shortfalls in state/city social services and the are cutting them like mad.
Most interesting that the Federal Government is not getting a "downgrade", have to agree.
"Even the slowdown in debt
"Even the slowdown in debt accumulation will swamp the government’s stimulus. In 2007-08, the last year of our debt bubble, private debt rose by $259 billion–adding 20% to aggregate demand. The fall of this to zero–a simple stabilisation of private debt–will remove 20% of demand from the economy. This is what is causing unemployment to explode now.
"On the monetary front, Bernanke has literally doubled government-created money in the USA in a matter of months, but even so the ratio of private debt to this is close to 30 to 1. He’d need to create twenty times as much (and give it to the debtors to cancel their debts, rather than to the banks in a futile attempt to maintain their facade of solvency) before there would be any chance of a monetary stimulus working. I simply can’t see him trying it."
--Steve Keen http://www.debtdeflation.com