Ratings agency stands to lose most if it follows through
It's known as Stein's Law: if something can't go on forever, it won't. And it's the reason S&P has now revised its outlook on the US sovereign credit rating:
With debt-to-GDP north of 80pc, it becomes very hard for the US to pay for another large shock. According to S&P, fully recapitalising Fannie and Freddie could cost 3.5pc of GDP, other government-guaranteed debt (like student loans) could also cause enormous losses; and another banking crisis could cost a whopping 34pc of GDP.
And that's before you even start thinking about the inexorable rise in Medicare costs as healthcare costs rise and the US population ages.