Monday, August 8, 2011

S&P Might Have Been Right

Ezra Klein-Washington Post

I read Ezra Klein's Wonkbook from the Washington Post every day and find it informative and reasonable. Here's what Ezra had to say on the S&P downgrade of U. S. credit rating.
S&;P is often wrong, but this time, they got it right, writes Ezra Klein: "Standard Poor’s didn’t just miss the bubble. They helped cause it. They were paid by the banks to award their AAA-stamp of approval to all manner of financial products that were anything but riskless -- which, ironically, makes them an accessory to the resulting explosion of U.S. debt...But that doesn’t make Standard Poor’s wrong in this particular case. 'The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges,' they explained in the statement accompanying Friday’s decision. After Republicans in Congress spent three months weighing whether or not to default on our debt and Senate Minority Leader Mitch McConnell said that paying our bills would never again be a foregone conclusion, can anyone really argue with that? After every Republican presidential candidate save Jon Huntsman either remained silent on, or flatly opposed, the deal to raise the debt ceiling, can anyone really say that U.S. debt is completely riskless? That there’s no chance of a political miscalculation, and if there is such a chance, that they can perfectly predict the outcome of the ensuing chaos?"

 Well, I agree with Ezra that S&P have a lot of nerve taking this action, reason tells me we gave cause. As I've said before, in a democracy, you get what you ask for...whether you cast a vote or vote by not casting a vote.  Remember the mid term elections?  People said they were tired and "voted the bums out." The country asked for the Tea Party legislators and now we got them. They worked their plan and kissed our AAA credit rating goodbye. Look for more fun in games, childish behavior and failure to understand what's at stake for the country.  Why should they cooperate with President Obama? After all their stated goal is to make him a one term president...I guess the cost doesn't matter.

The Legally Easy blog gave the following insight to the recent events:

The United States is indeed no longer the stable, reliable country it once was; America is unreliable, not because of the massive budget deficit, but because of unreasonable partisan politics.
Mitt Romney said the move was “a deeply troubling indicator of our country’s decline under President Obama.” Jon Huntsman said it was due to the spreading of a “cancerous debt afflicting our nation.” Michelle Bachmann also chimed in with her comment that “we were able to get through the Great Depression and not see a credit downgrade. Only under this president have we seen a credit downgrade.”
Case in point: the downgrade was immediately pounced on by candidates vying for the Republican presidential nomination.
Investors may not have been caught off guard, and they might not take much away from S&P’s decision, but politicians should take very seriously any suggestion that they cannot be trusted to work together and make the right choices for the country.

When will we put politics aside and take steps to create jobs and get the country back on its feet? Not soon enough!

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