S&P announced that if the government fails to raise the debt ceiling and defaults on its debts in August it will lower the US sovereign rating from AAA to D. News organizations rather that realizing the joke the rating agencies are and are reporting this like it is serious news. The “D” rating is automatic for defaults – so S&P is stating the obvious. But what is the value of a rating that says in July something is AAA, but in August it could be D? Anyone really want to make a fixed income investment decision based on this? It also shows ratings are lagging indicators – they are admitting they will close the barn door only after the horse escapes.