signals
Sometime ago a couple of senators were fulminating against rating agencies and asking the government to ignore them.

Well there's been another downgrade in rating (debt outlook, not bond rating per se), from Fitch and S & P. No, it's not for the political plight of the President, but the perceived wavering in revenue raising measures (namely the EVAT). These ratings are purely business. It assesses the risk investors take on when they invest dollars in government bond issues (denominated in USD). If the fiscal deficit spirals out of control, there is a good chance that the government may experience difficulties in repayment, with outright default being the worst scenario. Note that if the market agrees with the ratings and finds RP bonds too risky, the interest rate will have to go up for these bonds to find investors.

So - these agencies could be right, could be wrong. They carry a lot of credibility, so I don't think they should be ignored; however, they're good signals about what the world thinks about the credibility of our sovereign (public) bond issues.