Tuesday, April 19, 2011

Credit Ratings

I have just one thing to say about Standard & Poor's recent announcement about the U.S. debt rating:

You guys have a lotta damn gall.

This is the same Standard & Poor's whose AAA ratings of questionable mortgage-backed securities, a couple of years ago, encouraged buyers to invest in debt instruments based on home mortgages issued to anyone with a pulse.  The high ratings stayed in place right up to the time the foreclosures began to hit the news and the markets began to disintegrate.

And they now increase the possibility of a run on U.S. debt, by threatening to downgrade it "in a couple of years" if the politicians don't "do something.

I'm less concerned about the deficit than I am about other things.  We have a deficit right now because - surprise! - we have a recession, with unemployment just beginning to level off.  Many people have no jobs, many people who have jobs are feeling pinched; nobody's spending money.  And if you don't have a job, guess what?  You won't be paying as much in taxes!  A couple of years of full employment and a truly recovering economy, and the deficit would look much less scary; but we aren't going to get that, because the Tea Party is determined to cut spending until we all bleed.

If the S & P announcement will get Congress' attention and make them all sit down and negotiate, it could - maybe - have a long-term positive effect.  I don't claim that the deficit isn't a problem; just that it's being blown into more of a problem than it really is.  The real problem is the economy, which isn't recovering anything like as well as the news reports imply.  But the constant screaming I hear from the Republicans (for which read, from the Tea Party, since there is now no visible difference) makes me fear that we're about to revisit 1937, when the Federal government reduced spending because of deficit fears, and a slow recovery slid back into more depression.

I wouldn't trust anybody in Washington to manage the financial affairs of a sidewalk hotdog stand; how do these people get elected?


  1. cooper6:27 PM

    How do they get elected? They're showmen. Americans like a good show.

  2. I wish I thought you were kidding, cooper.