Rating Agency Two Step

Standard and Poor’s has just announced that it is watching the US very carefully. So carefully, in fact, that it might be forced to downgrade the US debt rating if not for some serious effort to deal with the budget deficit. That deficit, presumably, would cause damage to S&P’s clients. Those would be the big banks and other financiers. Yes. Those financiers who drove a hole in our economy and created the very budget gap that S&P now decries.

Am I alone in finding this more than a little disgusting?

Why should we pay one whit of notice to a rating agency who connived at the activities that led us to today’s problems?

Are they suddenly worthy? Are they suddenly so respectable and fiscally astute that they can tell us about the US bond rating? If so, this is a remarkable recovery for a firm that as recently as a few years ago thought Mortgage Backed Securities were just hunky-dory. AAA hunky-dory.

First off I think the entire budget debate is overblown. We have been running huge deficits for years. Ever since Bush decided to defund the government. S&P should have warned us back then. Perhaps it was politically motivated to keep quiet. The long term crisis, such as there is one, began the day Bush and the Republicans voted to execute a reckless fiscal policy. The rating agencies either were sleep back then, or didn’t think it noteworthy. The fundamental shift in our stability was a result of defunding. The crisis that was abetted by S&P and its fellow financial system hacks merely added a cyclical veneer to it. The deep problem stems from defunding and health care. With defunding running ahead at present.

This sudden urge to decry imbalances in the budget smacks of covering up the trail of gross negligence and venality that the rating agencies were guilty of as they fed at the derivatives trough. Their credibility was shot through then. It remains suspect. They are not competent to stand in judgement of fiscal policy.

Besides, as more than one more sane commentator has pointed out, there is absolutely no evidence in the real world credit markets of a move against the US. Our bond rates are low. Margins are good. Funding is abundant. Offerings are oversubscribed. Where is this crisis? In whose overzealous and ideologically driven mind does the crisis exist?

And why should the poor and elderly of America pay for this dreamt up problem by having austerity stuffed down their throats, while the very bankers and rating agencies who caused the problem remain unpunished?

When will someone stand up for the rest of us against these frauds?

Oh. wait. That would be the same Obama who caved in on economic stimulus and bank reform.

Oh well.