Let’s start with S.& P.’s lack of credibility. If there’s a single word that best describes the rating agency’s decision to downgrade America, it’s chutzpah — traditionally defined by the example of the young man who kills his parents, then pleads for mercy because he’s an orphan.
America’s large budget deficit is, after all, primarily the result of the economic slump that followed the 2008 financial crisis. And S.& P., along with its sister rating agencies, played a major role in causing that crisis, by giving AAA ratings to mortgage-backed assets that have since turned into toxic waste.
Nor did the bad judgment stop there. Notoriously, S.& P. gave Lehman Brothers, whose collapse triggered a global panic, an A rating right up to the month of its demise. And how did the rating agency react after this A-rated firm went bankrupt? By issuing a report denying that it had done anything wrong.
So these people are now pronouncing on the creditworthiness of the United States of America?
I’m actually in agreement with The Krugster on the trustworthiness of S.&P.’s credit ratings. However, you have to be either extremely wedded to an utterly foolish ideology or completely retarded to think S.&P.’s tendency to overrate the creditworthiness of organizations in general is somehow evidence that S.&P. is now underrating the U.S. Treasury’s ability to repay its debt. It is generally foolish to extrapolate a trend from one piece of data, as The Krugster does here; it is a heretofore unknown level of complete stupidity, however, to extrapolate a trend that goes in the opposite direction of the one piece of data you happen to have. And yet, that’s exactly what Krugman did. The New York Times needs to fire this clown.
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