My Country, Your Mess — and Let's Not Forget the S&P

President Obama isn't happy and investors aren't happy. So, who do we blame? I mean in Washington someone is responsible, right? Or maybe this S&P credit rating reduction is just plain wrong!

On Friday, Standard & Poor's reduced the credit rating for long-term U.S. government debt by one notch, from AAA, to AA+.  

The Obama Administration responded by taking to the airwaves, hammering away at anyone or anything responsible for the (gasp) downgrade. Treasury Secretary Tim Geithner even attacked S&P's credibility, saying the company’s record has been terrible and its arithmetic worse. According to the Treasury department, the credit-ratings firm made a $2 trillion math error, calling it the "amateur hour."

I guess you could call all this a theme. Paul Krugman certainly got the message, writing on The New York Times Web site that "it's hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy?”

Of course, it didn’t end there. The Administration, still not convinced that the American people won’t soon turn their frustrations towards the White House, also blamed Republicans. Campaign advisor David Axelrod even called it a “tea party downgrade.”

My father used to say that there’s a time and place for everything, and I wish it had been a message he delivered to President Obama instead of me because I’m convinced at this point that the only real amateurs are the hacks currently whispering into the ear of the President.

Ok, so maybe that was a low blow, but the point here is this. S&P has made a decision that has struck a nerve with investors, but not all of them. Billionaire Warren Buffett says the S&P is flat wrong, period. No name calling, no threats, just some billionaire logic saying, if anything, the downgrade may change his opinion of the S&P. Heck, ole Warren even told CNBC that he may even buy U.S. Treasuries that yield nothing if he had to do it. That’s good to know.

Moody’s also has me smiling a little. That ratings agency has reaffirmed America’s AAA status, disagreeing with its rival S&P. But not all is glorious at Moody’s either, saying all eyes must remain on the U.S. budget deficit and more importantly how it’s handled moving forward. Good luck with that.

So, once again we're turning to the President for answers. I’m just wondering where the White House plans to send me next. Change we can believe in? I guess President Obama was talking about my pocket change since before this is over, it may be all I have left.

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Don August 11, 2011 at 12:54 AM
Ask the experts.. They tell us that the US, which used to produce more VALUE than any other nation in the world, has changed its approach. Now instead of producing a growing amount of our so called wealth, we hire the people of other nations to produce it, and then we try to mark it up, at a profit. That is the classic superpower mistake, and it never works. We need to take 3/4 of that money we throw into a black hole we call "defense" and use it to defend our future by building the kinds of skills in our people they can build real wealth with in the future. We need to call an end to the big Ponzi scheme and start fresh, on a much less grandiose path. We can do it. But we have to LOSE THE HUBRIS.
Don August 11, 2011 at 01:03 AM
And thanks to the gridlock in Washington, in ONE DAY, the interest on it just became around 15-20% more expensive. We went from one of the AAA countries, to a second tier country, in the same league as dysfunctional Belgium and tiny (but beautiful) New Zealand. Also, we gave the rest of a world a unavoidable message that our once stable government's mandate to rule is increasingly threatened by unfettered greed- and potentially dysfunctional.
Don August 11, 2011 at 01:14 AM
You know and I know the right couldn't care less about the deficit. What they want to do is end all social programs, and reverse the gains we saw since the nation almost exploded from the huge inequalities that were exposed in the Great Depression. Now things are almost as bad as they were then for many people, but we have a very modest patchwork quilt of social programs. Without those programs, many poor people would literally starve. Without better skills, better schools, we can give up on half of the people in the country, they just wont have the skills to get and keep a job at any wage. We need to re-prioritize. The very same small businesspeople who most complain about "liberals" are the group that will be hurt the most if the economy implodes. Their businesses will die from lack of customers. There is nothing more heartbreaking that people whop beleived something for their entire lives and then they realize that it was all a lie. Its not a pretty sight. They should try to put themselves in others shoes. then they will be surprised to find that others who they might expect were against them look out for them too. We should all try to look ahead a few years. What we are doing now is not sustainable. In many places, post tax cutting, schools dont even have current schoolbooks. The teachers - the underpaid, often struggling themselves, teachers have to buy paper and pencils for the kids themselves.
Don August 11, 2011 at 01:22 AM
Unfortunately, they have a good point. We need new leaders.. (and I think the GOP is more at blame, than the Dems for the huge debt. After all, they are the ones who keep giving gifts to the rich. Many fo the rich they profess allegiance to would not mind paying higher taxes. They have pointed out to me that they CAN afford to. You can't take it with you.
Don August 12, 2011 at 03:13 AM
Fran, This "crisis" was coming for a very long time, and pundits have been predicting it imminently since well before the election. If you want to get a senior official at the IMF's perspective read this: The Quiet Coup: http://www.theatlantic.com/doc/200905/imf-advice The powerful elites of many countries have used them as their personal piggy bank for a long time. Our leaders are not unique in that. One has to wonder, what we can do to regain some accountability from elected officials, after they leave office. Both parties are guilty as could be. They are laughing at us. The first thing we need to do is end corporate personhood. Corporate personhood is where the US went wrong. Corporations do not die, they are not people. Their money should not be viewed as free speech. The political contributions they make are bribes, plain and simple. Bribery should be punished for what it is.


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