S&P on Abenomics: More than one third chance of downgrade

Here’s an example why one shouldn’t trust the judgement of credit ratings agencies.

From Reuters:

Rating agency Standard & Poor's said on Tuesday it saw more than a one-third chance that it would downgrade Japan's sovereign ratings because of uncertainty about whether the government's push to revive growth and end deflation will succeed.

Only more than a third chance of a downgrade???

Given Kuroda’s reckless grand experiment with inflationism, Japan’s debts should have already been downgraded. Yet the S&P can’t seem to go beyond figuring out on the magnified risks from the incorrigible economic logic contradictions from such policies; particularly the goal to ignite price inflation while hoping that the bond markets remain perpetually tranquil at zero bound rates.

Japan’s "Abenomics" epitomizes the proverbial “castles in the air”

The S&P seems to be tentatively alarmed (hence the more than 33% chance), but still maintains the wishful thinking that “Abenomics” may strike gold.

Or possibly, there might have been implied political pressure on the credit rating agency from the Japanese government, in the same way the US government has. The US government recently sued the S&P which many suspects as retaliatory move following the latter’s downgrade of the former’s debt.

Of course, the big three US credit rating agencies had not only missed predicting the occurrence of the US mortgage crisis of 2007-2008, they had been party to crisis; they were part of the blowing of the real estate bubble by giving mortgage securities blessings which many turned out to be junk. 

Ironically, the US government lawsuit against the S&P has been based on this.