RECENT UPDATES - DECEMBER 8, 2009

According to the Wall Street Journal: "Moody's Investors Service says the U.S. and U.K. must prove they can whittle down their ballooning deficits to avoid threats to their triple-A credit ratings. In a report released on Tuesday, Moody's set the two countries apart from other top-rated sovereign borrowers, calling them merely "resilient" rather than "resistant," a label it applied to Canada, France and Germany, where public finances are in better shape. Moody's released the report as part of an effort, spurred by investor demand, to examine the creditworthiness of the world's most highly rated countries. There are 17 such "triple-A"-rated countries, ranging from the U.S. to Australia.In both the U.K. and the U.S., Moody's said, much will depend on the vigor of the economic recovery and the willingness of governments to shrink the deficits. Under the most pessimistic scenario put forward by Moody's, the U.S. would lose its top rating in 2013 if economic growth proves anemic, interest rates rise and the government fails to dent the deficit or recover most of its assistance to the financial sector." The idea that the United States of America could lose its AAA rating is utterly amazing. Sovereign ratings are gaining importance as more governments with greater default risk borrow in the international bond markets. While the sovereign ratings are useful to governments seeking market access, the difficulty of assessing sovereign risk has led to agency disagreements and public controversy over specific rating assignments. During yesterday's board meeting, FWP Chairman Truesdell said: "We must stay focused on exposing the hypocritical economic behavior, legislation, and proposals in Washington and Florida. The solution to every economic problem will always center on making more, spending less, and/or adjusting expectations. It's that simple and we have to drum that home to the voters every day from now until the 2010 election. In the meantime, we must encourage voters to vote every day with their pocketbook by saving more, spending less, paying down debt, and becoming fiscally fit to fight the rapidly exploding battle from border-to-border and coast-to-coast for the economic soul of the nation. This is a battle we must not lose."