OK: Swallow this… The Financial Times, owned by the educational publisher Pearson, is reporting on the most recent Standard & Poor’s ratings downgrade of educational publisher Houghton Mifflin Harcourt, from B- to CCC. The ratings firm S&P is itself (as recently noted by MobyLives) owned by educational publisher McGraw-Hill.

At issue is whether HMH (held by Education Media & Publishing) can continue to make debt payments when textbook sales are plummeting. The firm has nearly $7 billion in debt. And JPMorgan projects that textbook sales in 2009 will fall by between 10 and 30 percent.

This report follows a Wall Street Journal report from January that reported that Credit Suisse was evaluating a bid for the trade publishing arm of Houghton Mifflin. Barry O’Callaghan, who heads HHM parent Education Media & Publishing, is himself a former Credit Suisse executive. And Credit Suisse financed O’Callaghan purchase of both Houghton Mifflin and Harcourt.

Which reminds us… has anyone heard a peep about this bid for HHM’s trade operations? We haven’t.