The S&P's Coup

[Donnachaidh]

http://www.counterpunch.org/auerback08082011.html

So the ratings agencies have reared their ugly heads again. David Beers, head of S&P’s government debt rating unit, announced Friday night that S&P has downgraded the U.S. credit rating for the first time, from AAA to AA. It’s a sham: S&P’s whole analytical framework reflects ignorance about modern money. If the US government -- Treasury and Federal Reserve -- capitulate to this outrageous act of economic extortion, it will effectively be sanctioning a beer hall putsch by the rentier class.

Justifying its decision, Standard and Poor said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.

“It’s always possible the rating will come back, but we don’t think it’s coming back anytime soon,” said Beers.

The response from Treasury was equally inane: “A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesman said last Friday.
$2 trillion, $4 trillion, who cares if the S&P is math-challenged? It’s irrelevant! The notion that the US can arbitrarily summon up the ability to register $4 trillion in “savings” demanded by Standard & Poor as the price for upholding America’s AAA rating is nonsensical, as it ignores the impact that the withdrawal of income will have on the overall economy and, by extension, the size of the government deficits that the ratings agencies regularly decry. Credit ratings are based on ability to pay and willingness to pay. A sovereign issuer of its currency, which issues debt in said currency - like the US - always has the ability to make US dollar payments. Whether it chooses to do so is another matter. But that’s a matter of politics, not economics.

More at the link --

[Skink]

1. America won't raise revenue, i.e. tax the rich.

The S&P is actually right here.

[RC]

3. Agreed.

Not down grading the U.S. is the crime. The only realistic way to pay down the debt is to increase revenue.

Raise taxes on the Well-To-Do.
Living Wage Jobs.
Put the economic criminals in prison.

Watch our current problems go away.

[Uben]

2. No reputable ratings agency could make a $2T mistake

It was done on purpose. David Beers is an American traitor. Fuck him and his right-wing piece of shit buddies.
They got caught on their "mistake" and said, "Oh well". Yeah, well they just happened to miss the pyramid scheme MAdoff had going, too. Some ratings agency, huh? They knew MAdoff's scheme was fraudulent, but they were making money off of it so they chose to ignore it. Credibility? None. I don't know why they are even allowed to do business in the U.S. A fucking third grade class could do a better job.