Saturday, August 06, 2011
Writing on the Wall: S&Ps Credit Rating Downgrade
Can you hear that? That odd noise that sounds like a fiery finger scratching on the palace wall? That's the sound of the US Credit Rating being downgraded. Earlier this week, in an event that passed unnoticed by those of us who do not belong (at least professionally) to the chattering class...the Chinese credit rating company Dagong said it is sending our credit rating down to an A rating based on our ridiculous looking account books.
At the end of the week came an event that garnished more attention: Standard & Poor downgraded the US Debt from AAA to AA+. The other two large firms, Moody's and Fitch, say they will hold the AAA rating for now...but have put us on notice that they will be watching.
Last week, the Republicans rammed a debt deal down the throat of Democrats...despite the fact that they still hold the White House AND the US Senate (by a whisker).
Is this the end of America? No...but it definitely feels like we're sitting down to dinner with Belshazzar: The writing is on the wall.
Of course, after the S&P downgrade, both political parties started to get their talking points out: Michelle Bachmann said Treasury Secretary Timothy Gietner should resign and House Speaker John Boehner (pronounced "Boner"...we still speak English here at Rip and Read, not German) said Democrats can't run anything. (This despite the fact that Republicans have been in charge for MOST of the past 30 years, during which this crisis grew.)
Meanwhile, the Obama administration...ever inspiring...began to whine about the fact that S & P should not have so petty, adding that it was really mean, and pointed out a 2 trillion dollar accounting mistake in Standard and Poor's numbers...according to Bloomberg, an unidentified spokesman from S&P responded that the mistake speaks for itself...which I can only presume means that, when a debt is SO LARGE that two trillion dollars can be overlooked....then your country doesn't really have a leg to stand on at the complaint department window.
(Vladimir Putin , by the way, weighed in...calling the US a Global Parisite...such a sweet guy.)
In the end, of course, this has been the natural result of the long term Republican Strategy of "Starving the Beast"-- George W. Bush rammed through a tax cut AND fought two wars...when the Republicans seized Congress, they did away with PAYGO- a measure put in place during the Clinton years which required Congress to find new funding to pay for ANY new programs OR Tax increases.
Back February of 2009, I wrote that the Democratic party had lost the battle for the latter half of the 20th Century...the GOP is halving everything it's own way, despite Barack Obama's victory in 2008, despite the recent lesson of the cost of the Bush years...
We who are just to the left of center are going to need to come up with a new strategy... otherwise, the handwriting is on the wall.
In the meantime, we got a debt Ceiling bill last week that does NOTHING to solve the problem... Emmanuel Cleaver (D-MO) called it a "Satan Sandwich"...
Here's my take...