A Mountain of AAA Debt

Yesterday, Standard & Poor’s lowered their outlook on the United States’ creditworthiness.  While the stock market understandably tanked in response to this negativity, keep in mind that S & P retained their AAA rating for our national creditworthiness.

More than anything, I think this latest opinion reflects not necessarily the full faith and credit of our nation, but a despair, and worrisome at that, in our political structure to effect any change.  The paralysis of our government to actually make significant budget cuts is so wrapped up in political mechanization and dysfunction that the focus and initial goals are lost, as are remedies.

I have some questions.  I know many of my readers have impeccable and impressive educational credentials in the financial area, like Competent Kate and Sweet Sabowtage.  I am relying on you to clarify some issues for me.  First of all, it was such rating services as S & P and Moody’s that erroneously gave higher than deserved ratings to such knee-deep-in-shit players of the financial crisis, i.e. Bank of America, Lehman Brothers, Goldman Sachs, etc.  So just how valid are the opinions of these companies who hand out ratings that are supposed to be objective and independent but actually are susceptible to the cajoling, influence-peddling and arm-twisting of the entities that are being examined?  Is S & P’s outlook downgrade of the U.S. government really an honest interpretation?  How much credence should  we invest in these credit arbiters whose past actions have been far from stellar?

Secondly and more importantly, this downgrade has implications for the next Congressional battle, that of raising the debt ceiling.  Should we not allow an increase in the ceiling, thereby impacting our future borrowing and interest-paying activities?  This could have a dramatic effect on our credit rating and our solvency.  Or should we raise the debt ceiling, thereby increasing our debt load and weakening our financial position even further?  Which poison is more beneficial to our country?  It appears that at this point, we are damned if we do and damned if we don’t.

Got any answers?  Please help me out here.


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