Obama administration official: S&P move 'a facts-be-damned decision'

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A senior Obama administration official is calling Standard & Poor's move to downgrade U.S. credit "a facts-be-damned decision," saying the rating agency admitted to an error that inflated U.S. deficits by $2 trillion.

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Wish I knew enough about REAL economics (not the voodoo that seems to be prevalent right now) to know who's side is real versus imaginary.
 
That would be both sides...
 
Wayne said:
Wish I knew enough about REAL economics (not the voodoo that seems to be prevalent right now) to know who's side is real versus imaginary.
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Ratings agencies are story tellers. They may have had legitimacy in the beginning but institutions become corrupted.
They are like real estate assessors - you hire the ones who give you the answer you want. Since there are powerful people who stand to make or lose money on what the ratings agencies say, people with skin in the game find ways to influence or argue for the ratings they want.

The US credit rating should probably have slipped years ago to serve as fair warning back before things had drifted too far. As things got more and more out of shape I think there was a powerful pressure on the credit raters NOT to rock the boat too much and potentially cause a big down-turn, especially while the US was involved in two (three) wars and the markets were in turmoil after 2008.

It may be that S&P downgraded now because they need to maintain some level of credibility. It could also (likely) be a political statement - but who directed it? I don't know. Or it could be that they had an analysis that was out of date or out of touch with the latest debt deal, really missed 2 trillion dollars but cannot now admit that they were not competent having just made an historical announcement. Or they could have been fed a bad summation by someone who had a vested interest like a bid short position on US securities.

In sum I would say that you are best off ignoring what the ratings agencies are saying because it isn't at all clear who they work for. China's own rater is probably a better source because they are a big investor in US securities and they really need to know what they are investing in, i.e. it works for the folks whose money is at risk.
 
China as an big investor for politics power, not ideal for money.
 
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