"Standard & Poor's cut America's credit outlook to negative on fears U.S. lawmakers may not agree on a long-term plan to reduce the deficit. The move signals a 1-in-3 chance that America could lose its AAA rating within 2 years. A downgrade could mean higher borrowing costs for the U.S. gov't, businesses and consumers, exacerbating America's credit woes."
This was repeated over and over, ad nauseam, in the mainstream press, which includes NPR. Now, we are supposed to understand, I suppose, that Republican, and even Democrat calls, for cutting your heart out are perfectly reasonable.
My bullshit meter needle jumped immediately over to the right side of the bullshit dial, so I kept my eyes open for intelligent commentary.
Here is some of what I found this week on S&P's self-serving attempt at subverting our "democracy:"
Long-time progressive activist, Norman Soloman's BS meter apparently went off the scale immediately, and one day later he wrote in a RootsAction alert::
At a time when extreme budget cuts to Medicare and other vital programs are on the table in Congress, S&P is trying to escalate a deficit-reduction panic along Pennsylvania Avenue. In short, S&P is trying to manipulate Washington for Wall Street's gain.
S&P is the same outfit that rated hundreds of billions of dollars in subprime-backed securities as investment grade.
And S&P "gave Lehman, Bear Stearns and Enron top ratings right up until their collapse," the Center for Economic and Policy Research explains. S&P "has a horrible track record for judging credit worthiness."
In a related article concerning the trashing of the American Middle Class and poor, Robert Scheer wrote:
Published on Wednesday, April 20, 2011 by TruthDig.com
The New Corporate World Order
by Robert Scheer
The debate over Republicans’ insistence on continued tax breaks for the superrich and the corporations they run should come to a screeching halt with the report in Tuesday’s Wall Street Journal headlined “Big U.S. Firms Shift Hiring Abroad.” Those tax breaks over the past decade, leaving some corporations such as General Electric to pay no taxes at all, were supposed to lead to job creation, but just the opposite has occurred. As the WSJ put it, the multinational companies “cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show.”
See URL above for rest of article.
And then, yesterday, 4/20/11, William Greider weighed in on S&P:
Published on The Nation
The Credit Rating Hoax
William Greider | April 20, 2011
Standard & Poor’s, the self-righteous credit-rating agency, has a damn lot of nerve. It provoked scary headlines by solemnly threatening to “short” America. That is, downgrade the credit-worthiness of US Treasury bonds unless Congress and the president oblige creditors by punishing the citizenry with severe budget cuts. What a load of crap.
The headline I would like to see is this: “S&P Execs Face Major Fraud Investigation, Takes the Fifth Before Federal Grand Jury.”
News coverage on S&P’s credit warning typically failed to mention that Standard & Poor’s itself is in utter disrepute. It was an unindicted co-conspirator in the Wall Street deceitfulness that brought the nation to financial ruin. During the bubble of inflated housing prices, S&P and other rating agencies blessed the fraud-based mortgage securities issued by Wall Street banks with AAA ratings—deceiving gullible investors around the world and assuring bloated profits (and executive bonuses) for the greedy bankers. S&P provided cover for the massive scam that led to the crisis that sank the national economy.
That story line is the essential reason federal deficits soared in the age of Obama. National wealth was massively destroyed, government tax revenues collapsed, the feds spent trillions bailing out the imperiled financial system. In short, the bankers did it, abetted by see-no-evil accomplices like Standard & Poor’s. . . . .
See URL above for rest of aticle, etc.
Another relevant article by Greider, especially for hopelessly deluded Democrats:
Krugman Gets His History Wrong
Posted on June 1, 2009
Paul Krugman, like many other Democratic partisans, wants to blame Republicans and right-wingers for causing the financial disaster by deregulating the system. This may be comforting to Dems but, alas, it requires them to falsify the history, as Krugman does in this morning's column. Krugman flogs the notorious Garn-St. Germain Depository Institutions Act of 1982 and quotes Ronald Reagan's extravagant praise for the measure. [http://www.nytimes.com/2009/06/01/opinion/01krugman.html?_r=1&hpw]
What Krugman leaves out is that financial deregulation actually started two years earlier -- before the Gipper got to Washington. A Democratic Congress and Democratic president (Jimmy Carter) enacted the Monetary Control Act of 1980 which removed all remaining controls on interest rates and repealed the federal law prohibiting usury (note that sky-high interest rates and ruinous predatory lending have been with us ever since). It was the 1980 legislation that took the lid off banking and doomed the savings and loan industry, the mainstay that used to provide housing loans and home mortgages. The thrifts were able to raise capital because they were allowed to pay a half percent more in interest to depositors. Bankers wanted them out of the way. The Democratic party obliged.
See URL above for links and rest of article.
Lastly, hopefully, is the following article by Simon Johnson of "Baseline Scenario:"
While I may be accused of a radical left-wing mindset for my views on the environment and Capitalism, and occasionally of being a right winger, racist and xenophobe, for my views on population growth, mass immigration, and etc. (don't listen to me, I am beyond redemption, but do the labels really mean anything these days?), Simon Johnson is in fact an intermediary between "left" and "right," and was once an "International Monetary Fund's Economic Counsellor (chief economist)."
Is S&P’s Deficit Warning On Target?
Posted: 21 Apr 2011 05:26 AM PDT
By Simon Johnson
See link for important supporting info.
On Monday Standard & Poor’s announced that its credit rating for the United States was “affirmed” at AAA (the highest level possible), but that it was revising the outlook for this rating to “negative” – in this context specifically meaning “that we could lower our long-term rating on the U.S. within two years” (p.5 of the report). This news temporarily roiled equity markets around the world, although the bond markets largely shrugged it off.
While S&P’s statement generated considerable media attention, the economics behind their thinking is highly questionable – although, given the random nature of American politics, even this intervention may still end up having a constructive impact on the thinking of both the right and the left.
It is commendable that S&P now wants to talk about the U.S. fiscal deficit – one wonders where they were, for example, during the debate about extending the Bush-era tax cuts at the end of last year.
The main problem is that S&P did not lay out even the most basic numbers or even point readers towards the nonpartisan and definitive Congressional Budget Office analysis of medium- and longer-term budget issues.[1] This matters, because the CBO numbers definitely do not show debt exploding upwards immediately from today – if you’ll take the time to look at Table 1.1 in the latest CBO report, the line “debt held by the public at the end of the year” (meaning private sector holdings of federal government debt; excluding government agency holding of government debt) makes it clear – debt as a percent of GDP rises to 75.5 percent at the end of 2013 and then increases very little through 2019.
There are two serious budget issues made clear by the CBO’s analysis. First, the big increase in debt in recent years has been primarily due to the financial crisis. To see this, compare the January 2011 CBO forecast (cited above) with its view from January 2008 (see page XII, Summary Table 1), before the seriousness of the banking disaster – and ensuing recession – became clear. At that point, the CBO expected federal government debt relative to GDP to reach only 22.6 percent (compare with 75.3% for the same year, 2018, from the 2011 projections.)
In other words, the financial crisis will end up causing government debt to increase by more than 50 percent of GDP over a decade. This is the major fiscal crisis of today and our likely tomorrow (for more on this, see this column).
Again, see link for important supporting info.
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Damn, here is another article:
Senate report on Wall Street crash: The criminalization of the American ruling class
18 April 2011
The US Senate Permanent Subcommittee on Investigations released a voluminous report last Wednesday on the Wall Street crash of 2008 that documents the fraud and criminality that pervade the entire financial system and its relations with the government.
The 650-page report is the outcome of a two-year investigation that involved over 150 interviews and depositions as well as the examination of subpoenaed emails and internal documents of major banks, government regulatory agencies and credit rating firms. The report, entitled “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” establishes that the financial crash and ensuing recession were the result of systemic fraud and deception on the part of the mortgage lenders and banks, carried out with the collusion of the credit rating corporations and the complicity of the government and its bank regulatory agencies. . . .
See link above for rest of this informative article
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For another kind of "balance," don't forget to tune in on occasion to Scott Horton, at Antiwar Radio. I recommend Gareth Porter and Philip Giraldi.
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