Tuesday, July 19 2011 2:09 PM – Debt Ceiling Deal, U.S. Credit Rating Cut

“Leaders of a bipartisan “Gang of Six” senators said Tuesday that they’ve reached agreement on a major plan to cut the deficit by roughly $4 trillion over the coming decade in what could be a bold entry into a debate on the deficit long bogged-down by bitter partisanship. The deal, which was quickly endorsed by President Obama, caused stocks to add to their gains.” CNBC

Rating agency Egan-Jones cuts credit rating on U.S. debt from AAA to AA+. Never heard of Egan-Jones? It is the only rating agency that is not paid by the issuers of the debt it rates. That eliminates what I think is a terrible conflict of interest for Fitch, Moody’s and Standard & Poors. Egan-Jones has been way ahead of Moody’s and Standard & Poors in rating changes over the last few years.

Egan-Jones said the downgrade was not due to the debt ceiling issue but just the total amount of debt the U.S. has accumulated and is still accumulating.