Srsly? – Credit rating downgrade edition
AWOP’s Monday thru Friday look at the absurd, special Saturday morning downgrade edition.
There’s plenty of blame to go around, says Standard & Poor’s, including the Democrats’ unwillingness to cut “entitlements.” But then there’s the very pointed reference to the GOP’s unwillingness to consider tax revenues. But most sane people have other thoughts.
Just who the hell do they think they are anyway?
Here is the great irony: S&P (and the rest of the ratings agencies) helped contribute in no small way to the overall economic crisis. The toadies rated junk securitized mortgage backed paper AAA because they were paid to do so by banks.
They are utterly corrupt, and should have received the corporate death penalty (ala Arthur Anderson).
S&P shouldn’t be in the business of commenting on a country’s political spats unless they’ve been going on so long that they’re likely to have a real, concrete impact on the safety of a country’s bonds. And that hasn’t happened yet. There’s no serious macroeconomic reason to think America can’t service its debt and there’s no serious political reason to think the Tea Party has anything close to the power to provoke a political meltdown in which wewon’t pay our debt.
First, recall that this is the agency which rated all those worthless mortgages AAA that caused this fetid financial mess in the first place. They gave Lehman a Triple-A rating one month before bankruptcy. The real question is why they are still taken seriously by anyone.
- It was S&P that had Lehman Brothers rated AAA just a month before they went bankrupt.
- It was S&P that rated AIG’s credit default swaps as rock solid investments
- It was S&P that admitted to making a $2 trillionaccounting error (remember, playing with numbers is their core business and reason for being) in advance of the downgrade of U.S. debt.
- A downgrade in U.S. debt means functionally that U.S. treasury bills are, in S&P’s oh-so-wise opinion, less trustworthy and a greater credit risk to investors. This comes only a day after investors fled the DOW and S&P500 into the safe and waiting hands of…you guessed it: U.S. treasuries. The same treasuries that S&P suddenly finds a more dangerous buy. So what does that say about the stock market, and the S&P500? Perhaps S&P might wish to re-evaluate the credibility of its own market index.
- None of the other ratings agencies are taking the drastic step that S&P has. S&P is all alone in their move to downgrade U.S. credit.
- When all is said and done, U.S. treasuries are still the safest investment in the world, and it would take either an idiot or someone with a strong political agenda to contend otherwise.
But wait a minute … something’s fishy about all this
The first question I have is which hedge fund managers stand to profit. That’s an answer I want right now. Not ten months from now. NOW. On July 25th, someone placed a ONE BILLION dollar bet that our credit rating would drop. It’s time for them to be identified.
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