On downgrades

There's been plenty of well-deserved fire directed at the role of credit rating agencies in their failure to look behind the U.S. housing bubble. But when an industry noted for operating under extreme incentives to offer positive ratings starts pointing out what it considers to be a bad investment, it's probably worth paying attention:

Building new nuclear plants could prove hazardous (to) the credit ratings of power companies.

Moody’s Investors Services warns in its new report — “New Nuclear Generation: Ratings Pressure Increasing” — that it may view nuclear construction plans as a negative.

Moody’s worries that investment in new nuclear is so costly that it amounts to a “bet the farm” strategy. It increases business risk and operating risk.

Not that Saskatchewan as a province (or Wall and his political mentors) might have any potentially relevant experience as to what can happen when a government doesn't pay attention to how its zeal to slap together ill-advised megaprojects might affect the province's finances:

Saskatchewan, unable to sell its bonds in New York and facing fiscal meltdown, acted out of dire necessity...(A) debt-free province in 1982 turned into a $14.8-billion debt-ridden basket case in the ’90s. This, plus a $1-billion deficit,... meant Saskatchewan led all of Canada in debt per capita.

Under notice from the credit rating agencies and with an imminent downgrade to BBB category by Standard & Poor’s, Saskatchewan’s ability to borrow diminished precipitously.