Lois Wymore: Credibility question
August 13, 2011
To the editor:
Standard and Poor's drop in the U.S. credit rating was a shock. Wasn't raising the debt ceiling supposed to prevent a lower credit rating?
We were told during the last few weeks if Congress didn't raise the debt ceiling this horrible catastrophe would wreak havoc on our pitiful economic climate.
With fear mongers spreading doom, many were left to their imaginations and dreamt up worse times for the future. There are a few things to think about concerning the downgrade.
S&P is a private business and a subsidiary of the McGraw-Hill companies. It is not a bipartisan government credit agency, the International Monetary Fund or the World Bank. S&P's mission is to make money and its business is to annualize the economy.
S&P is just one company. It shares the analytical stage with Moody, Finch, and A.M. Best (U.S.), Baycorp Advantage (Australia), Capital Standards Rating (Kuwait), Credo Line (Ukraine), Dagong Global (People's Republic of China), Dominion Bond Rating Service (Canada), Egan-Jones Rating Company U.SICRA Limited (India), Japan Credit Rating Agency Limited (Japan), and Muros Ratings (Russia alternative rating agency).
S&P, along with Moody, enjoy 40 percent of the credit rating business market in the U.S. with Finch at 14 percent. They are the same credit rating firms that gave those mortgage junk bonds their AAA+ rating, which was probably the first trigger leading to the financial meltdown of 2008.
So maybe their creditability should be questioned?
Exactly who profits? Do they have an agenda? Is this a way to achieve that agenda? What are they doing making a political statement rather than sticking to the business of economic projections? Is it an attack on the Obama administration? On Congress? And so goes the many questions.
Should we look at what Standard and Poor's said and take them at their word?
"The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program."
The whole statement can be found on the website at http://www.standardandpoors.com.
The first three words, "the political brinksmanship," is telling. I believe the company is trying to scold Congress about behavior less than productive at the same time threatening Congress while adding a professional opinion to the seemingly unending debate.
To Standard and Poor's: I know Congress squandered an opportunity to make some changes that had the potential to be progressive and amazing. What we don't need is yet another political pundit with recent questionable creditability with what appears to be an axe to grind at taxpayer expense.