S&P and the USA -- "In short, S&P is just making stuff up" (Krugman)

[jefferson_dem]

S&P and the USA

OK, so Standard and Poors has gone ahead with the threatened downgrade. It’s a strange situation.

On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation. And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency.

On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?

Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.

<SNIP>


In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.

<SNIP>

http://krugman.blogs.nytimes.com/2011/08/05/sp-and-the-usa/?smid=tw-NytimesKrugman&seid=auto

[jeanmarc]

1. Their trial balloon failed...

...but they did this any way? This really doesn't make any sense.

[uponit7771]

2. They've been doing it with the "Greek Crisis" all freakin summer! They pull figures out of their ass

[girl gone mad]

3. Unrec for Krugman pushing insolvency nonsense again.

To quote Galbraith from the last time Krugman made a similarly absurd statement:

What do you mean, exactly, by the phrase, “solvency of the government”?

According to my dictionary (Webster’s Third New International) an entity is “solvent” when it is “able… to pay all legal debts.”

If you will look in your wallet, you will find, on any Federal Reserve Note: “This Note is Legal Tender for All Debts Public and Private.”

Can we agree that the United States government, of which the Federal Reserve is a part, can always produce the Federal Reserve Notes required to pay its public debts?

"It follows, without any possibility of misunderstanding or error, that the United States Government is always going to be solvent."

Read Galbraith's full letter here: http://pragcap.com/james-galbraith-responds-to-paul-krugman

[Sherman A1]

4. Simple fix to this

The President could simply "suggest" that S&P needs to spend some quality time with a very large team of auditors and agents from the IRS and then DO IT. I bet they have something wrong with their books somewhere and it could take a looooong time to audit them.

S&P created or helped to create this mess and I think their assets should be seized then auctioned off, that is after the proper legal proceedings finds them guilty and revokes their corporate charter.

[flamingdem]

5. That was lame of them, the White House called them "amateurs"

Just saw that on the Rachel Maddow show

[enough]

6. Exactly as they were making things up by giving prime ratings to junk deriviatives

originally. Why does anyone pay any attention the these rating agencies?

[Constantinno]

7. kicked

and recommended.

[LaydeeBug]

8. kick

[Hosnon]

9. Agreed. After baptizing CDO's with AAA ratings, I can't believe anyone listens to these morons. nt.

[bigdarryl]

10. I bet he won't get much interviews in the media on this because he isn't

saying it's Obama's fault.He probably will be on Keith O and maybe Tweety, and Rachel's show