No cheers for Standard and Poor's

Standard and Poor's rating service downgraded the U.S. from AAA to AA+.

No cheers for them. Here's part of the NY Times article:

"The credit rating agencies have been trying to restore their credibility after missteps leading to the financial crisis. A Congressional panel called them “essential cogs in the wheel of financial destruction” after their wildly optimistic models led them to give top-flight reviews to complex mortgage securities that later collapsed. A downgrade of federal debt is the kind of controversial decision that critics have sometimes said the agencies are unwilling to make."

Of course. Standard and Poor's and Moody's rating agencies were the ones that gave AAA ratings to the securitized bundles of subprime mortgages that investment houses were peddling at great profit and with no regulation during the "housing bubble". The crash of this junk market in 2007-2008 was one of the main -- probably the main -- factors that lead to the continuing major recession afflicting us. Yes, Virginia, S & P gave these crap securities higher ratings than it now gives the United States. Can we take their judgment seriously? They have already shown themselves to be tools of the industries they were supposedly rating. (Oh, did I mention Alan Greenspan?)

As if this were not enough, it turns out that S.&P. made a major (not mega-, not giga-, but tera-dollar)  mistake in calculating U.S. debt -- to the tune of at least $ 2 trillion dollars. They now acknowledge this mistake, but have not revised their AA+ rating.

BTW: Business Insider had an article on this downgrade which quoted the S.&P. report as mentioning S.&P.'s belief that the Bush Tax Cuts would never be allowed to expire. Clearly the revenue that is lost through these cuts would be a significant balance to expenditures, especially if and when the recession lets up. As usual, the business community and the ratings agencies all know that the recession and the tax cuts are major issues; yet, they waited and hid their concerns until after the Republicans and TeaScreamers  terrorized and extorted the President, the Dems, and the rest of the country before they brought up the fact that maybe, just maybe, the crazy deal just made might not solve our problems.

In fact, near-term, cuts instead of stimulus is exactly a recipe for continued unemployment and recession. The markets now recognize this. They also recognize that, with these imposed cuts, the government has hardly any tools left to combat the financial -- and social -- dangers that confront us. If anyone comes up with a good idea, it will be killed by Republicans unless it involves cutting regulations, taxes, protections, safety nets, education or health care and medicine.

So: that's what happens when people vote for Republicans. When will this lesson be learned?

Finally, note that the Congress is away for several weeks (though not officially adjourned). The President babbles on but does nothing. He's waiting for the Republicans to come back from their vacations (where they are plotting further ways to paralyze and crush him) so that he can broker some more "compromises." What will he and his advisers sell off next?