Saturday, August 06, 2011

Downgrade on degraded politics

I'm sure by now you've all heard Standard and Poor's downgraded our long term credit worthiness from AAA to AA. Seconds after the announcement, the internets exploded with reactions. GOPers instantly blamed Obama for the drop and seized on out of context quotes to make their case. The media dutifully followed their lead. The cable networks trotted a steady stream of Republicans spewing their misleading accusations, while concern trolling about "our spending problem" themselves. Apparently neither Fox or CNN could find any Democrats to put on the air.

Me, I spent the last 24 hours bitching on Twitter and following the many and various spins. Most of it annoying, though side-splitting comic relief was supplied by Redstate's Eric Erickson's impossible predictions. And almost as funny was John Cole, who spent the evening posting increasingly drunken tweets.

Lefty reax was mixed as usual, but one theme that quickly emerged, and the media mostly ignored, was the absurdity of S&P making these pompous political pronouncements on our "debt problem" after they partly caused it themselves by rating all those worthless derivatives as AAA before the crash of 08. Nonetheless, Ezra defends their downgrade to some extent:
In Washington, it’s almost trite to say that the political system is broken. It’s been clear for some time that things really are different, that norms and procedures that once kept fractious congresses functioning have eroded with terrifying speed. If anything, S&P is, as usual, noticing the deterioration too late. But that doesn’t mean the deterioration is not real, or that it should be ignored. Too often, the pressure in Washington is from interest groups and activists and political consultants who are, perhaps without meaning to, pushing towards further dysfunction. Those of us in Washington who would like to see the government work have long wondered when the business community and other entities who need a functioning political system would begin exerting a countervailing force. Perhaps it begins now. If not, then this may be the first of many downgrades to come.
Meanwhile Steve Benen recalls Joe Klein's assessment of S&P back in April when they first started threatening to downgrade.
The news that Standard & Poor’s has decided to issue a warning that the US government’s AAA bond rating might be in some jeopardy if a deficit-reduction agreement isn’t reached should elicit several responses from sophisticated readers. My own threshold response is: Hey, weren’t you the same guys who gave AAA ratings to the repackaged subprime mortgage-backed securities that, in truth, were utter dreck? And didn’t that help cause the 2008 economic collapse? And didn’t subsequent accounts reveal that you were in bed with the banks whose products you were supposed to be rating? I mean, you guys are still in business? Amazing.
That still holds very true. Makes you wonder why anybody cares what they say -- ever. And of course you've heard that they issued the downgrade only hours after they made a $2 trillion mistake in their math. Which is why they couched their reasons mainly in political terms.

Who knows how this will all shake out in the end, but one thing is painfully clear. The people who are the most wrong wield the most power and influence in our politics. And that's the real root of the dysfunction in our system.

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Blogger Capt. Fogg said...

To me, saying the system is broken is like saying your new car is broken because you let your alcoholic and suicidal brother in law drive it. It isn't broken, it's been borrowed on, repossessed, hijacked, stripped for parts and nobody ever changed the oil.

11:20:00 AM  

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