They may not have any credibility, but they still effect the markets. Moody's has put every single MUNI in the country on negative watch.
The Federal government is still AAA, but every municipal debt issuer is now suspect and shaky according to Moody's.
For the first time ever, the ratings agency placed all munis on negative outlook, a precursor to potential downgrades. Historically, the agency looked at munis individually and considered them to be too diverse to make blanket statements about.
But it seems overspending and the hollowing out of the revenue base is a nationwide phenomenon affecting cities and states everywhere.
So why does the federal government still get a free pass?