John Chambers, managing director of sovereign ratings at S&P was interviewed by CNN's Anderson Cooper after the S&P lowered our credit rating. There were a lot of factors at work here when S&P decided to become a new unelected branch of U.S. government when they issued their downgrade even AFTER they admitted to making a $2 trillion mistake in their calculations. In other words they wanted to do this for months and no stinkin' facts were going to stop them. You can see how Chambers tries to skirt the math error as if two trillion was trivial in this debate. The panel of pundits CNN used for the most part, except those who want to destroy our social safety nets, said that the world still views our bonds as the safest bet in the world.
I do believe that if Republicans and tea party ideologues didn't play politics with the debt ceiling, this probably wouldn't have happened. There's a reason why, before the tea party came into town, staunch conservatives never seriously screwed with it before (outside of a few dissents by members in Congress over raising it). In his many complaints it's obvious that S&P blames mostly the GOP because of their behavior and for their love of Grover Norquist's hostage-taking anti-revenues ideals.
The firm's conclusion "was pretty much motivated by all of the debate about the raising of the debt ceiling," John Chambers, chairman of S&P's sovereign ratings committee, said in an interview. "It involved a level of brinksmanship greater than what we had expected earlier in the year."
He also attacked our social safety nets, but as Duncan says: "Apparently we're supposed to care about what some idiots at some corrupt organization think about anything." The rating agencies helped cause the global financial meltdown in the first place since they rated so much junk AAA right before Rome burned down. Matt Taibbi has been writing about this for a long time.
David Atkins recaps some of the reasons why the S&P has no real standing after their past actions.
- It was S&P that had Lehman Brothers rated AAA just a month before they went bankrupt.
- It was S&P that rated AIG’s credit default swaps as rock solid investments
- It was S&P that admitted to making a $2 trillion accounting error (remember, playing with numbers is their core business and reason for being) in advance of the downgrade of U.S. debt.
- A downgrade in U.S. debt means functionally that U.S. treasury bills are, in S&P’s oh-so-wise opinion, less trustworthy and a greater credit risk to investors. This comes only a day after investors fled the DOW and S&P500 into the safe and waiting hands of…you guessed it: U.S. Treasuries. The same treasuries that S&P suddenly finds a more dangerous buy. So what does that say about the stock market, and the S&P500? Perhaps S&P might wish to re-evaluate the credibility of its own market index.
- None of the other ratings agencies are taking the drastic step that S&P has. S&P is all alone in their move to downgrade U.S. credit.
- When all is said and done, U.S. treasuries are still the safest investment in the world, and it would take either an idiot or someone with a strong political agenda to contend otherwise.
S&P’s credibility to make any sort of statements about anything at all is highly suspect. By all rights their failure to properly evaluate Lehman and AIG alone would mean that if the alleged free market were doing its job, all the ratings agencies would have gone out of business or been disbanded a long time ago. It is remarkable that anyone on the left, right or center pays any attention to anything they have to say, much less that an entire nation quakes in fear of their oracular pronouncements. The Wall St. Emperor was exposed as naked years ago, yet everyone still pretends that he’s clad in the finest raiments of wisdom. The fact is that S&P, for whatever reason—be it political, economic, corrupt or some combination thereof—has desperately wanted to downgrade U.S. debt for months. First came the clearly unfeasible demand that the U.S. cut $4 trillion in spending while eliminating all the Bush tax cuts, even on the middle class. Then came the austerity debt-ceiling bill, which was put in place over the top of a snookered public precisely to avoid a credit downgrade. Then came the threat to downgrade our credit anyway. Then came the admission of their $2 trillion accounting error in making the threat. And then came the downgrade in spite of it all. Let’s be clear: S&P was always going to make this move, no matter what we did. The austerity bill was thus an
utterly pointless exercise to appease a ratings agency acting in bad faith.
The President needs to be strong here and not give an inch to S&P or the GOP and govern like a Democrat. Look what trying to compromise with Republicans has accomplished for his presidency so far?
It's kind of shocking how the entire stock market is guided by confidence fairies and not actual numbers. Politicians and CNBC pundits are loath to give many straight answers concerning Wall Street since so much betting is involved and one wrong statement can cause a 1000 point drop in a matter of minutes simply because of fear. I'd say we'll wait and say how the market responds to this power play by S&P. As Paul Krugman says:
On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation. And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency.
On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated sub-prime mortgage-backed securities are now declaring that they are the judges of fiscal policy? Really?
Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.
In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.
So this is an outrage — not because America is A-OK, but because these people are in no position to pass judgment.
Just expect the GOP to come out in force to use this downgrade as a way of trying to undo the New Deal and every major advancement progressive politics has produced for the betterment of our country.
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