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"But then I figured that the ratings agencies lagged the market "

i can't back this up with stats, but watching the debt market the past two recessions i would tend to agree - the market leads the agencies. in effect "credit watch" basically means prepare for a downgrade.

"It also doesn't explain why commercial paper yields are at historic lows relative to T-bills. Corporations are a great bet for the next 3 months, but not the next 10-20 years? Maybe, but that's not the way its worked in past recessions. And it doesn't jibe with corporate equity action where all stocks were graded up relative to treasuries (and still are) and blue chip companies were graded up relative to less secure ones. There might be some answers to this inconsistency, but I haven't found them. I'd be glad to hear ideas."

liquidity premium? i don't have the answer either - but i think it is important to point out the anomaly.

"If Social Security is in big surplus now but won't be ten years from now, why wouldn't corporate pensions be in the same boat?"

1. different cash flow dynamics
2. what pension plan? the majority are defined contribution plans now.

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