Well, it happened. This afternoon, S&P downgraded U.S. long-term debt one notch from AAA to AA+. This is the first time the U.S. has had a less than perfect credit rating since, like, ever.
But more to the point, fuck S&P. These are the same jackasses who maintained that AIG, Countrywide, credit default swaps, and all the other gargantuan bullshit that got us into this mess in the first place was AAA and as good as gold. Now they want to pretend they’re actually doing their jobs. You know what? Too late, jerks. You (should) have no credibility.
Sadly, no matter how catastrophically wrong they were in the past, people still treat their analysis as fact, and the media reports on it in a way that allows them to drive the markets, all the while maintaining that all they do is observe and report. Bastards.
Maybe there’s an optimistic way to look at this, though. Searching… Ok, try this: Maybe this is a sign that these major players in the economy—ratings agencies, major investors, etc.—are going to hold Congress’ feet to the fire over this debt ceiling nonsense. The whole debate over the debt ceiling was and is complete nonsense, and if it were possible I would say the entire country should sue Congress for gross negligence and dereliction of duty. (Can we do that? Someone look into it.) It’s going to hurt, but maybe reactions like this one from S&P will show these asshats that nothing they did was good for anyone, on either side. Maybe record low approval ratings (14%!!) will get through to them and they’ll start doing their jobs. It could happen, right? Right?
The real danger is that we’re going to enter a period in which no one ever gets re-elected, and we’ll have a series of hundreds of freshman legislators (see Tea Party) holding the government hostage while they try to look important on TV and survive long enough to get a nice job when they inevitably get booted from office. Meanwhile, the country will have no leaders. So much for looking on the bright side.
Have a nice weekend!
P.S. – Do you listen to Planet Money? You should. Those guys are smart.
Debt rating? Why do people keep saying this? There’s the debt ceiling. And bond ratings.
You mean Bond/Credit Rating. ABC said the same thing. Makes no sense.
Meanwhile, skilled veteran congressman Dennis Kucinich wants to represent Washington. But the futzy old mossbacks here got their tighty whities in such a pretzel over a man from Ohio of all places relocating here just to peddle his, what? Peddle his influence and stature and legislative skill and decades of experience. Pah! Experience, schmerience. Do they even know what a latte is in Ohio? I bet not.
So instead we will elect some pimply freshman fucknuts who grew up in like Kent and got a C average at WSU some shit like that. But at least he won’t be a carpetbagger! Perish the thought.
Thanks Republicans, now go crawl back into your slimy holes and let us adults be.
Actually, no – they’re your standard conventional wisdom zombies whose sole purpose is to provide a pretty, smart sounding picture of the CW so as to convince otherwise reasonable people that “the markets” know best. I’d always suspected as much, then I heard their idiotic interview w/ Elizabeth Warren in 2009.
…and I’ve seen the first rumors online already of ATMs out of money.
@1 – Bonds are debt.
Dereliction of duty is only for the military, so they can only charge someone with it – they can’t be held accountable to the same standards as the 18 year olds who do what the government says.
I DO listen to Planet Money, and I’ve heard there and elsewhere the suggestion that, as scary as it is to lose an A, it’ll have very little real effect.
So, it’s a meaningless judgment from an organization that does not make very good judgments to begin with. “A” rating? More like “Eh” rating, hurr.
But yeah, the whole anti-incumbent sentiment does seem a much more real threat. Our current congress is paralyzed because a lot of people in there were elected in order to butt heads with everybody else. So, they butt heads and can’t get shit done, and everybody gets pissed off, and decide the only way to fix things is to elect someone even MORE pissed off…
@6 but we don’t rate the debt really, do we? We rate the particlar bonds ability to fulfill the obligation and predicted rate of interest. I guess it’s semantics. But it seems a rather recent mutation of the term and I bet it leads to confusion.
On the otherhand I see somebody has already gotten confused enough to turn this into a backhanded endorsement of Dennis Kucinich.
BTW not sure crowing about Kucinich’s BA from Cleavland University & MA from Case Western in Communications are the academic creds you think they are.
what is their duty, tony?
cut spending?
eliminate the 40% of Federal spending that is borrowed?
is that their ‘duty’, tony?
no.
that’s not what you mean.
you want them to raise taxes. on somebody else.
what percent of your income do you pay in Federal Income tax, tony?
are YOU willing to pay more?
until then, stfu.
@3
‘adults’….
you’re funny.
spending other people’s money- that’s the grownup thing to do, vince?
spending your kids money, does that make you a Real Man, vince?
you Liberals are pathetic…..
The $1 Billion Armageddon Trade Placed Against the United States Bond Market at http://www.marketoracle.co.uk/Article294…
“The whole debate over the debt ceiling was and is complete nonsense, and if it were possible I would say the entire country should sue Congress for gross negligence and dereliction of duty.”
Yes, absolutely.
“Peddle his influence and stature and legislative skill”
He doesn’t have any of those things
“@1 – Bonds are debt.”
Bonds are a very specific kind of debt. They aren’t intergovernmental debt, bank loans, etc. There’s no such thing as a “debt rating.”
Sadly, no matter how catastrophically wrong they were in the past, people still treat their analysis as fact…
Wait, do you think their analysis is wrong? Do you think that our confidence in US debt shouldn’t be decreasing as its debt/GDP and deficit/GDP ratios skyrocket and its politicians show themselves incapable of reaching a compromise that can reverse that trend?
@10 – Yes, I would happily pay more in taxes to pay for health care, education, and many other social services. I’d rather it not go to pay for ill-conceived and never-ending wars, though.
@14 – Yes, I think they’re wrong. Relative to other government bonds, I think it’s easy to argue that U.S. bonds are the safest in the world. And if their concerns are right, they should have decreased the rating months ago, if not years. But beyond all that, I think we should stop listening to them. They’re hardly the impartial observers they claim to be.
I’m with @15. And I highly recommend this fantastic read from Rob Delaney:
http://robdelaney.tumblr.com/post/854022…
Anthony @15: Only one AAA rated country, Singapore, has a higher debt/GDP ratio than the US. That is only one of several objective, quantitative reasons to belive that, on a comparative basis, the other AAA countries’ bonds are safer bets than the US’s. And on a subjective basis, I challenge you to find a bond trader who doesn’t think Germany’s and Switzerland’s are safer bets than the US’s.
I certainly agree that the downgrade is overdue. It probably should have happened in 2008 when the ratios took off.
They have terrible predictive skills. They downgraded Japan during their lost decade, and Japan never defaulted and is still regarded by investors as one of the best risks.
Anyway, Anthony, I wouldn’t be too optimistic. Republicans will view this as confirmation of their belief that “runaway spending” would lead to a downgrade and rise in rates…even though it was really their playing politics with the debt ceiling that did it. It’s in their interest to learn the wrong lesson from this, and the media will go along with them as it always does.
@17: The difference is other countries that have high debt/GDP ratios tend to be high-tax countries that have no room to raise more revenue. The U.S. could close most of its budget gap just by letting the Bush tax cuts expire, and would still have some of the lowest taxes in the world. There’s really no danger of us defaulting for monetary reasons, only for political reasons.
In a nutshell –
“Democrats own the downgrade. They fought Republicans and Tea Party supporters every step of they way, and forced a deal which was insufficient. They played class warfare and race politics against arguments that we needed to drastically change our spending habits.”
William A. Jacobson
Associate Clinical Professor,
Cornell Law School
@20 – define class warfare and race politics. I think the answer will be telling.
@20:
Bullshit. The Democrats agreed that we needed to change our spending habits – look at the deal they signed. The Democrats were the ones that thought that only changing our spending habits *wasn’t enough.* It never was taxes vs cuts. It was cuts AND taxes vs cuts. Just look at the numbers and explain how we’re supposed to keep Social Security and Medicare in any form and pay back our debts without an increase in the historically low taxes that we’re seeing today. It simply can’t be done, unless suddenly the Republicans think it’s a good idea to cut 90% of military spending.
Make absolutely no mistake about it, the Republicans got precisely what they wanted out of the debt ceiling deal: the US economy in the gutter during a Democratic presidency so they can run a strong election season. Bonus: it proves their point that the federal government doesn’t work. Why the hell do we elect people to govern when their core assertion is that governance is defective?
I think we should reallocate US forces on the ground in Afghanistan to S&P.
@21 Really gets to the heart of the conversation
The view from where I’m standing, several thousand miles and an ocean away from you guys, is that S&P simply responded to a big chunk of your government mouthing off about how prepared they were to default. I don’t think S&P are the “bastards” in this situation.
Michele “Crazy Eyes” Bachmann is calling for Tim Geitner to resign?!? It’s Bachmann that should resign! It was Bachmann calling for default!!! It was Bachmann and the Tea Baggers that refused to compromise! WTF?!?
Oh, and Bachmann’s congress is rated the worst in history by the American people! She has some nerve!
If a low approval rating isn’t getting them to do their jobs NOW, they need to be hung from trees.
No worries mates, nothing has changed overnight: our wildly successful business plan remains the same (free trade, tax relief for job creators, cutting the unnecessary fat, ..). Wall Street experts wanted you to know that our brightest are still at the helm to navigate the occasional pothole so that you can do your part in selecting a representative that get with the program.
@20
Of course William A. Jacobson made that quote. Have you looked at his blog? He is unabashedly a right wing partisan. i.e.:
To paraphrase the good prof, don’t confuse academic credentials with knowledge.
Associate Clinical Professor = Law School’s version of a TA.
The republican party is a far more effective terrorist organization than those rag-tag al Qaeda guys could ever hope to be.
@17 — If you find a bond trader who thinks German bonds are safer, he’s fighting the market.
German 30-yr instruments carry a nominal interest rate about 20 basis points lower, but their real interest rates (indicative of relative risk) are maybe 50 points higher.
The difference is the Euro’s lower inflationary outlook. By the nature of its governing structure, Europe can’t use inflationary tactics to counteract economic slumps. That’s why they’re in a big jam right now, and one of the reasons Germany is at greater risk.
@33
If the Republicans are terrorists, then the Democrats are pedophiles for what they’re doing to the next two generations of American children.
Of the $14.3T in debt, $4.5T of that has been laid on since 2007. GW Bush’s last deficit was 10% ($161B) of Obama’s ($1.6T).
@36 If you keep your trolling a bit more subtle, you’re more likely to get the response you’re looking for.
In general I agree with the “fuck S&P” sentiment. Personally I don’t think ANY rating agency’s classifications should be given the time of day if they aren’t willing to put their money where their mouth is and offer to insure bonds for the value of they’re rating them at.
(You wouldn’t trust an insurance adjuster that rated someone a low risk but wouldn’t themselves offer a policy to cover that supposed low risk, would you?)
That one practice alone would have prevented much the collapse of the housing & finance markets in 2008.
Nevertheless, it still seems silly to me to hate on S&P for this downgrade. Especially when they are so very, very right, saying:
Lord knows that sure sounds like a 100% spot-on summation of the current situation to me!
@38: And Nile Gardiner is nobody with any amount of integrity. I’m sure you know that he is one of the Tea Party’s biggest cheerleaders across The Pond, right?
Republicans: “Government is dyfunctional! Elect us!”
Voters: “Fuck Yeah!”
Republicans: “We will vote against any measure that makes government functional.”
Voters: “What?!”
Republicans: “Government is dysfunctional, therefore any vote to make government functional is moot. QED.”
Voters: “Um, fuck yeah?”
S&P: “Your dysfunctional government is no longer as trustworthy as it once was.”
Republicans: “The S&P downgrade is a result of disastrous Democratic policies.”
Voters: “Really?”
Republicans: “See, we told you government was dysfunctional! This is proof! Vote for more of us in 2012!”
Voters: “Well, government has been more dysfunctional than usual, maybe they’re on to something…”
The sad thing about this tactic is that it just might work.
“Maybe record low approval ratings (14%!!) will get through to them and they’ll start doing their jobs.”
Why are people so dissatisfied with the people that they vote into office? Didn’t the t-baggers just get voted in last November? What did people think the t-baggers would do once they got the majority in the House?