About the same time I saw the slashdot article summary, I saw this in my google reader feed and thought it was a pretty good parody. Credit to
http://paul.kedrosky.com/archives/2010/07/letter_from_us.htmlLetter from U.S. Federal Reserve Regarding U.S. Credit Rating
By Paul Kedrosky
Dear U.S. Investors,
The current U.S. recovery has been the most successful recovery in U.S. economic history. It has been judged by economists around the world to be the best recovery ever, and investors have told us that they love it. So we were surprised when we read reports of debt problems, and we immediately began investigating them. Here is what we have learned.
To start with, gripping almost any country's debt certificates in certain ways will reduce its rating by 1 or more letter grades. This is true of the current U.S. recovery, previous recessions, as well as many recoveries in Greece, Argentina, the U.K., and elsewhere. But some investors have reported that U.S. debt can drop 4 or 5 rating levels when tightly held in a way which covers the "Full faith and credit" strip in the lower left corner of the embossed certificate. This is a far bigger drop than normal, and as a result some have accused the current economic recovery of having a faulty economic design.
At the same time, we continue to read articles and receive hundreds of emails from investors saying that the current economic recovery is better than the last economic recovery. They are delighted. This matches our own experience and testing. What can explain all of this?
We have discovered the cause of this dramatic drop in credit rating, and it is both simple and surprising.
Upon investigation, we were stunned to find that the formula we use to calculate how credit rating agencies display the rating is totally wrong. Our formula, in many instances, mistakenly displays 2 more letter-grades than it should for a given credit issue. For example, we sometimes display AAA when we should be displaying A2. Users observing a drop of several grades when they grip their debt certificates in a certain way are most likely in a region of the country with an insolvent state, but they don't know it because we are erroneously displaying a AA/AAA rating. Their big drop in rating is because their high credit rating was never real in the first place.
To fix this, we are adopting the BiS's recently recommended formula for calculating what credit grade to display for a given country's solvency. The real credit rating remains the same, but the economic recovery will report it far more accurately, providing users a much better indication of the economic strength they will get in a given area. We are also making debt certificates a a bit taller so they will be easier to see.
We will issue a free economic update within a few weeks that incorporates the corrected formula. Since this mistake has been present since the original economic recovery, this economic update will also be available for previous recoveries, and will adjust history accordingly.
We have gone back to our labs and retested everything, and the results are the same-- the U.S. credit rating is the best we have ever sold. For the vast majority of investors who have not been troubled by this issue, this software update will only make your credit rating more accurate. For those who have had concerns, we apologize for any anxiety we may have caused.
As a reminder, if you are not fully satisfied, you can return your undamaged debt certificate to any regional Federal Reserve branch, or the online Federal Reserve website within 30 days of purchase for a full refund.
We hope you love U.S. debt as much as we do.
Thank you for your patience and support.
Ben
