I Question Standard and Poor's Judgement

Say what you will about S&P's decision to downgrade America's debt to AA+, but their subsequent decision to not automatically downgrade all American municipal debt to at least AA+ totally baffles me.

"Pursuant to our criteria, the fiscal autonomy, political independence, and generally strong credit cultures of U.S. states and local governments can support ratings above that of the U.S. sovereign"

To translate from finance-speak to normal English, S&P believes that select states and municipalities are less likely to default on their obligations then the Federal Government. By this logic, S&P must also think that these states and municipalities stand a chance of staying solvent and weathering the inevitable malstrom following an American default.

Do they honestly think that AAA rated Maryland could meet its obligations if the U.S. defaulted? Maybe in bizarro S&P world Maryland could slog it out, but in the real world where tax receipts and federal support would evaporate? Color me unconvinced.