Tag Archives: Standard and Poor’s

GFY, S&P

27 Wednesday Jul 2011

Posted by in economy, Financial Crisis, Wall Street

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As the extortionists at Standard and Poor’s threaten a credit rating downgrade, not just if the debt ceiling isn’t raised but if the deficit isn’t cut by $4 trillion, Robert Reich points out that if the crooks at S& P had done their effin’ jobs the deficit and debt that they demand be cut wouldn’t be where it is today:

“Who is Standard & Poor’s to tell America how much debt it has to shed in order to keep its credit rating? Standard & Poor’s didn’t exactly distinguish itself prior to Wall Street’s financial meltdown in 2007. Until the eve of the collapse it gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.”

A practice from which S&P profited handsomely:

“S&P’s net annual revenues from ratings nearly doubled from $517 million in 2002, to $1.16 billion in 2007.”

And what happened to those securities S&P stamped AAA?

“…90% of the subprime-backed mortgage securities S&P and its competitors rated AAA in 2006-2007 – which means they’re as sound as Treasury notes – were later downgraded to junk bond status.”

Back to Reich:

“Standard & Poor’s (along with Moody’s and Fitch) bear much of the responsibility for what happened next. Had they done their job and warned investors how much risk Wall Street was taking on, the housing and debt bubbles wouldn’t have become so large – and their bursts wouldn’t have brought down much of the economy.

Had Standard & Poor’s done its job, you and I and other taxpayers wouldn’t have had to bail out Wall Street; millions of Americans would now be working now instead of collecting unemployment insurance; the government wouldn’t have had to inject the economy with a massive stimulus to save millions of other jobs; and far more tax revenue would now be pouring into the Treasury from individuals and businesses doing better than they are now.

In other words, had Standard & Poor’s done its job, today’s budget deficit would be far smaller.

And where was Standard & Poor’s…during the George W. Bush administration – when W. turned a $5 trillion budget surplus bequeathed to him by Bill Clinton into a gaping deficit? Standard & Poor didn’t object to Bush’s giant tax cuts for the wealthy. Nor did it raise a warning about his huge Medicare drug benefit…or his decision to fight two expensive wars without paying for them.

Add Bush’s spending splurge and his tax cuts to the expenses brought on by Wall Street’s near collapse – and today’s budget deficit would be tiny.

Put another way: If Standard & Poor’s had been doing the job it was supposed to be doing between 2000 and 2008, the federal budget wouldn’t be in a crisis — and Standard & Poor’s wouldn’t be threatening the United States with a downgrade if we didn’t come up with a credible plan for lopping $4 trillion off it.”  

So why in the hell is anybody listening to what Standard and Poor’s has to say? If we had a Justice Department that was actually interested in justice, the S&P analysts would be behind bars instead of issuing threats.

Let the Railroading Commence

24 Sunday Jul 2011

Posted by in budget, Congress, economy, Medicaid, Medicare, Social Security

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I sense that the railroading of the American public will commence shortly. That August 2nd deadline for either raising the debt ceiling or facing economic crisis has now been moved up to 4pm today, so says Speaker Boehner and Treasury Secretary Geithner.

“House Speaker John Boehner (R-Ohio) told his GOP rank-and-file that congressional leaders are working round the clock on a deal set for release before the Asian markets open on Sunday at 4 p.m., a source tells The Hill.”

“The speaker and other leaders started their day at the White House, where Treasury Secretary Timothy F. Geithner warned of possible trouble in the markets if policymakers don’t announce a viable plan for raising the debt limit before Asian exchanges open Sunday evening, according to people familiar with the meeting.”

Add that to remarks by John Chambers, managing director of Standard and Poor’s, in an interview last week:

“Chambers added…that even if the parties agree to raise the debt ceiling, it may not be enough to avert a [credit rating] downgrade. Chambers said the country must implement a plan to reduce the annual budget deficit by roughly $4 trillion over 10 years, which makes the debt manageable over the long term.”

Since when do the ratings agency crooks who aided and abetted the banksters—and profited handsomely from doing so—leading up to the mortgage meltdown, get to dictate economic policy? But I digress.

That sort of ‘we have to do something big and do it now, or else’ mentality leads to “solutions” like proposing a “Super Congress”:

“Debt ceiling negotiators think they’ve hit on a solution to address the debt ceiling impasse and the public’s unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.

This “Super Congress,” composed of members of both chambers and both parties, isn’t mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers — six from each chamber and six from each party.

Legislation approved by the Super Congress — which some on Capitol Hill are calling the “super committee” — would then be fast-tracked through both chambers, where it couldn’t be amended by simple, regular lawmakers, who’d have the ability only to cast an up or down vote.”

It would also require only a simple majority vote. Isn’t it amazing how that 60-vote filibuster thingy isn’t an obstruction when it comes to what Congress really really wants to do? Like screw us over.

If this all sounds a bit familiar, it’s because we’ve been here before. Remember TARP? Get ready for TARP 2.0. Yves Smith at naked capitalism:

“We commented last night on the parallels between the pressure tactics used to railroad the passage of the TARP and our current contrived debt ceiling crisis. The similarities have increased in a predictably bad way. Even worse than the economic toll radical budget cutting will impose on ordinary Americans is the continued undermining of basic democratic processes.

The foundation was set with the TARP’s radical power grab…[H]ere is the truly offensive section of an overreaching piece of legislation:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

[…]

As with the TARP, we have the drumroll of a purported threat to public safety, namely the possible Destruction of the Financial System as We Now Know It. John Boehner is stoking the panic by saying there needs to be a deal by the opening of trading in Asia or the Market Gods will take their vengeance. Turbo Timmie will no doubt warn of dire consequence of the failure to ink a deal by the supposed drop dead date of August 2 when he makes the rounds on Sunday TV.”

“I hear the train a comin’, it’s rollin’ ’round the bend…”