If they have half the effect that credit reporting agencies have on people, it has to be devastating. They also have the same effect on the ability of private companies to finance themselves by issuing bonds.

However, credit ratings that hinder irresponsible lending and borrowing are a good thing. What I am interested in is, to what extent the rating of countries (and to a lesser extent of companies) is politically motivated? What is the rate of US government debt, and what would need to happen for it to be downgraded?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman