Tess Vigeland: It’s been about year since the twin fiascos of the debt ceiling debate and the subsequent Standard and Poor’s downgrade of this country’s credit rating. You remember: No more AAA, only AA+.
It was, indeed, historic. And forecasters in business and politics made dire predictions about how the downgrade would whack your wallet.
But it didn’t exactly turn out that way, did it? We’re now in an Olympiad, so we asked Marketplace’s Mark Garrison to host a little medal ceremony for the best and worst downgrade predictions.
Mark Garrison: As far as worst predictions, it would take a medal stand the size of a swimming pool to hold all the people who were wrong. But we’ve only got room for one, so the gold goes to Republican Congressman Paul Ryan, speaking on Fox just after the downgrade.
Paul Ryan: Obviously, not only does it hurt the federal government in its ability to close the deficits, but it hurts people. You know, car loans, home loans, all these things are gonna go up.
Didn’t happen. In fact, the opposite occurred. Home loan interest rates are now at record lows, in large part because global investors kept faith that America would always pay its debts.
But not to pick on Ryan or Republicans. Plenty of Democrats were wrong too. Treasury Secretary Tim Geithner said several times that a downgrade would never happen, until it did. But then he got something right, speaking to CNBC.
Timothy Geithner: The judgment by S&P changed nothing, added nothing to what people know about this country.
That proved true, but it’s not good enough for a gold medal for best prediction. That goes to Legg Mason fund manager Bill Miller, who appeared on the same show where Congressman Ryan got it wrong a year ago.
Bill Miller: Contrary to what I think people may expect, I don’t expect we’ll pay more for interest rates. The downgrade was not an economic event. It was a symbolic and psychological event.
Miller wasn’t a lone voice. At the time, Warren Buffett said the U.S. should be upgraded to AAAA, a rating which doesn’t actually exist. Investors who followed that advice made money.
The Olympics were born in Greece, so let’s give a special medal to Europe. Cary Leahey at Decision Economics explains why.
Cary Leahey: The U.S. is not doing well, but it’s doing better, much better than Europe.
All the recent turmoil in the eurozone actually made the U.S. economy look like a safe place to invest.
In New York, I’m Mark Garrison for Marketplace.
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