So, S&P has downgraded the USA...sort of like when my son told me his allowance was too small...it got smaller. Let's see what the reaction of the pros is...
Paul Krugman:
Credibility, Chutzpah and Debt
By PAUL KRUGMAN
Published: August 7, 2011
To understand the furor over the decision by Standard & Poor’s, the rating agency, to downgrade U.S. government debt, you have to hold in your mind two seemingly (but not actually) contradictory ideas. The first is that America is indeed no longer the stable, reliable country it once was. The second is that S.& P. itself has even lower credibility; it’s the last place anyone should turn for judgments about our nation’s prospects.
Robert Reich:Why S&P Has No Business Downgrading the U.S.
Friday, August 5, 2011
Standard & Poor’s downgrade of America’s debt couldn’t come at a worse time. The result is likely to be higher borrowing costs for the government at all levels, and higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow.
Why did S&P do it?
Not because America failed to pay its creditors on time. As you may have noticed, we avoided a default.
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Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?
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S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies — Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.
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In other words, had Standard & Poor’s done its job over the last decade, today’s budget deficit would be far smaller and the nation’s future debt wouldn’t look so menacing.
We’d all be better off had S&P done the job it was supposed to do, then. We’ve paid a hefty price for its nonfeasance.A pity S&P is not even doing its job now. We’ll be paying another hefty price for its malfeasance today.
Ezra Klein:
Does the downgrade mean more U.S. towns will go bankrupt?
Standard & Poor’s announced another wave of downgrades on Monday, lowering the credit ratings that affect thousands of cities, school districts, public housing and transportation projects directly linked to federal funds.
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But the worst may not be over yet. S&P is expected to announce another wave of downgrades later this week. “Where we’re headed is more like spreading a flu.
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Another wave of downgrades could come at a particularly bad time for some financially troubled corners of the country. Though overall default numbers remain low, there’s already been a recent uptick in the number towns, cities and other municipal bond holders on the brink of solvency.
Andy Borowitz:
Predator Drone Seen Hovering over Standard & Poor’s Headquarters
Company Could Be in for Downgrade of its Own, Experts Say
WASHINGTON (The Borowitz Report) – Just days after downgrading the credit rating of the United States, Standard & Poor’s was on high alert this morning after an unmanned Predator drone was seen hovering over its headquarters in lower Manhattan.
While the mission of the Predator was unclear, some insiders speculated that S & P might be in for a downgrade of its own.
The Predator appeared in the skies above the company’s headquarters minutes after it was rumored that S & P was about to downgrade the United States to the same status as Pluto.
As a so-called “dwarf nation,” the U.S. would no longer be accorded the same respect as a recognized country like France or Brazil, one S & P source said: “Basically, the United States would be considered a social network with parking.”
At the White House, President Obama offered no comment on the Predator’s mission, saying only, “The Predator is an effective weapon against the enemies of the United States of America.”
He did offer apologies for what he called “an accidental Predator missile strike” over the weekend at a golf course in Virginia which narrowly missed Rep. Eric Cantor (R-VA).
In other financial news:
– In an effort to find a safe haven, rattled investors fled the dollar today and moved their money into Groupons.
– In one rare bright spot on Wall Street, manufacturers of red ink posted record profits.
– And finally, Secretary of the Treasury Timothy Geithner explained his decision to remain at the U.S. Treasury: “I didn’t want to look for a job – it’s fucking scary out there.”
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