The curtain has risen and fallen on America's latest piece of political theater, and the last minute debt-ceiling deal pushed the next one to early February.
Although economists will probably argue for years about the "real cost" of the federal shutdown in terms of lost wages or productivity, the drama has already impacted America's credit rating.
Fitch has placed the United States' AAA credit rating on a watch list, specifically citing repeated congressional failure to put its house in order. The Chinese credit rating agency DaGong downgraded it for similar reasons.
Standard & Poor's, likewise, has had a AA+ rating on the United States since 2011.
Washington's blustery incompetence does not seem to have bothered markets to any great degree, at least not this time. The Standard & Poor's 500 Index and the Dow Jones Industrial Average have climbed 8% and 5% since late August when the debt ceiling and possible shutdown re-entered the news cycle. Although both did briefly turn negative when the shutdown began, they recovered quickly.
There's no guaranteeing, however, that the next crisis in February won't scare away the bulls.
Investors tired of the political uncertainty have available options if they want to invest in a more fiscally responsible climate today.
Investing in Fiscal Prudence
The rating agencies evaluate a few factors in determining the rating of a sovereign issuer, and all have their own methods.
In general, they look at a variety of qualitative considerations, like institutional stability of the government and its flexibility to respond to crises. That is, the agencies evaluate how likely a government is to collapse altogether and how well a government can put together effective policy solutions to crises.
They also tend to employ quantitative metrics in different ways. Fitch, for example, maintains that a government debt-to-gross domestic product (GDP) ratio between 80% and 90% is the upper limit for a AAA rating. Standard & Poor's, however, looks more at the trend of that number and assigns a score based on which way it's heading, and to what degree.
Only eight countries in the world have AAA credit ratings from the four major credit ratings agencies: Canada, Denmark, Finland, Norway, Sweden, the Netherlands, Switzerland, and Germany. (That number falls to two – Finland and Norway – if you include Dagong and JCR, the Japanese rating agency).
In general, the eight countries in question have high per-capita GDP, downward trends in their debt-to-GDP ratio, and governments that have been able to maintain consistent, prudent policy making.
And you can invest in them.
Each one of the countries named has an ETF that provides a reasonable approximation of their national capital markets.