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   I am perplexed by the storm of criticism leveled at Standard & Poor's. Don't get me wrong--that S&P, or any of the ratings agencies, is even taken seriously is a monumental farce, given their role in the financial crisis.

  But, we're missing the point:

  It is a mistake to solely blame the Republicans.

  It is a mistake to solely blame the president.

  Unless we say it clearly, we cannot get this right: this is about a completely corrupt and failed economic system, a system that has failed for 30 years to serve anyone but the very wealthy and, in the past few years, chose global austerity over meaningful work.
   

   Of course the downgrading of the country's debt is ridiculous. But, the whole friggin' debate about the phony debt and deficit "crisis" has been ridiculous--a debate that has been fueled and supported across the political spectrum: by Republicans, by Democrats, by the White House, and by the nation's official transcribers (formerly known as "journalists").

   Standard and Poor's is playing its role perfectly in this entire economic game.

   Let's review.

  Point 1. We are in the midst of a multi-decade campaign to promote a scam. The scam starts long ago with the drum beat about the virtues of the "free market" and "free trade", promoted by Democrats and Republicans who advance the grand myths of low taxes, deregulation and small government ("The era of big government is over"...)

   Point 2. Those myths lead, in part, to the financial crisis in 2008. Simple example: The Bill Clinton-Robert Rubin caper to repeal Glass Steagall in favor of the Orwellian-sounding Financial Services Modernization Act—we know how that worked out.

   But, as important, a critical part: what I call creeping austerity--a long-term assault on wages, forcing people to live on their credit cards and cash generated from a housing bubble.

   Point 3. The ratings agencies were complicit partners in building the pyramid of bad assets for one reason: profit and greed. They are not independent organizations. They are, in fact, tools of Wall Street--and oftenincompetent to boot.

   In fact, some money managers already get this and arecutting ties with these bozos.
 

 Some of the world's largest asset managers are cutting ties to credit rating agencies, potentially signaling the beginning of the end of their grip on global financial markets.

Managers responsible for billions of euros of fixed income investments are reviewing relationships with the likes of Fitch Ratings, Standard & Poor's and Moody's Investors Service, whose calls on Portugal, Ireland and the United States have roiled central banks desperate to avert a collapse of the Euro zone.

Fund firms contacted by Reuters said rating agency research tended to be backward-looking and superficial, and often encouraged the kind of speculation that has recently dragged down Italy, one of the world's largest government bond issuers.

    4. S&P has the temerity to pull off the current debt downgrade farce, in part, because virtually no one went to jail for the financial crisis--certainly no one from the ratings agencies. .So, if you are an S&P executive, the message to you is very clear: you will never pay a price for either being complicit or giving out crazy information.

   The opposite is true: if you help us enforce the austerity agenda, then, you will prosper.

   All this nonsense about the debt and deficit "crisis" could have been addressed in a calm, simple manner.

   We could cut $2 trillion in corporate welfare

    We could have spent another trillion dollars to give people work because (aside from the morality of making sure people have a job) people who are working, duh, pay taxes--which helps federal and state budgets (ask Jerry Brown about that).

    Or we could have said let's enact a single-payer system as a sensible economic (not to mention moral) solution to health care costs, demand that the rich pay higher taxes and save hundreds of billions of dollars and end foreign wars and, presto, magically, plenty of money would flow into the coffers of the government.

    But, instead, the answer has been: take out of the hides of working people. Preach austerity.

    This isn't an S&P ideology.

    This is a broad agenda that has been shared and promoted by both political parties and the traditional media.

     S&P is simply a tool to enforce that agenda.

(note: I'll be on the road most of Monday from the crack of dawn so I will not be able to dialogue with colleagues until very late. Have fun)

Originally posted to Tasini on Mon Aug 08, 2011 at 06:44 AM PDT.

Also republished by Jobs Wages and Community Investment Working Group, Income Inequality Kos, and ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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Comment Preferences

    •  Excellent diary. (3+ / 0-)
      Recommended by:
      Friend of the court, frandor55, Tanya

      These problems have been a long time coming.  I still remember the Health Care meetings where I used to work, the year they gave us a choice.  We could pick our health care plan but nearly all of then required us to contribute except for one very crappy plan.  Then the next year our contribution increased still more.  My guess is that by now the people working there are totally footing their own health care contribution.  

      It is obvious that Corporate America won the Cold War, certainly not the working person.  Furthermore, now living and working in Southeastern Europe it is pretty obvious to me that the privatizations scams pretty much represented collusion between old party apparatchiks and our own greedy capitalists.  They learned a lot from one another - but I think their days of running the show are numbered.

       

      It gets on my nerves, and you know how I am about my nerves...

      by ciganka on Mon Aug 08, 2011 at 07:16:42 AM PDT

      [ Parent ]

    •  Tip & Rec if only for headline. (0+ / 0-)

      Thump! Bang. Whack-boing. It's dub!

      by dadadata on Mon Aug 08, 2011 at 08:53:03 AM PDT

      [ Parent ]

  •  Saw on CNBC this morning that China... (4+ / 0-)

    ...has a AA- rating.

    What kind of sense does that make IF the criteria is ability to repay obligations as promised?

    Which means, as you suggest, that this is not prudent analysis. It is an integral part of the con game you describe.

    The so-called "rising tide" is lifting only yachts.

    by Egalitare on Mon Aug 08, 2011 at 07:03:46 AM PDT

    •  that is the joke (0+ / 0-)

      in rating nations, because more so than other debtors, it is not inability to pay but unwillingness to pay that comes into the picture for all but the smallest national economies.

      No one really trusts the Chinese completely as far as I can tell to play by the rules the rest of the major economies are using.   Whether the rules make sense, is a different matter.

  •  Definitely Not Breaking News (4+ / 0-)
    Recommended by:
    frandor55, Tanya, WheninRome, ItsaMathJoke

    Image Hosted by ImageShack.us

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Aug 08, 2011 at 07:33:39 AM PDT

  •  I think it's what is called "making the market." (1+ / 0-)
    Recommended by:
    Egalitare

    Much as pollsters "prepare the ground" prior to elections by ferreting out the issues most likely to attract Republican voters and repulse Democratic ones, rating agencies devise strategies to facilitate the accumulation of currency by speculative, non-productive entities.

    But, just as political pollsters sometimes err (in the Obama/Biden election) the rating agencies sometimes fall down on the job and at present they're being driven to distraction by the fact that nothing seems to be working to drive un-earned income back up to a comfortable level.
    Since about 2000, the Fed has been reducing bench-mark interest rates.  That initially drove dollars into the mortgage market where something approaching the desired risk-free 8% could be collected --guaranteed by the government via Freddie and Fannie Mae.  Then, when defaults on mortgages appeared, they jacked up the rates and the bubble burst.

    Wall Street is swimming in a sea of illogical notions -- beginning with the one that says people who have no money represent a greater risk and should therefor pay more to use money, so the premium is sure to make them fail.  There's a reason most businesses fail in the first year; it's what's expected. Self-fulfilling prophecies.

    S&P apparently hoped that would work.  Downgrading Uncle Sam would force the yield up.

    Don't get me wrong.  I'm not unsympathetic.  If Uncle Sam paid 8.1% in untaxed interest in 1990, 2.5% in 2011 is just plain unacceptable.
    Of course, since Uncle Sam prints the money and none of the enterprises he funds turn a profit, there's no reason why keeping our dollars safe has to be sweetened with a premium.  Remember when buying U.S. Savings bonds was a sign of patriotism?

    http://www.youtube.com/cyprespond

    by hannah on Mon Aug 08, 2011 at 07:44:43 AM PDT

  •  What about the Fed's role in all this? (1+ / 0-)
    Recommended by:
    Tanya

    I didn't see any references to the Fed in your diary, although there may have been something in your abundance of links.  I just wish that, before every news item about the DEBT CRISIS!!!!, before every idiot pol railing against money for NPR, before every Orwellian protection of upside-down tax policy, there could be a note about the audit of the Fed:

    the U.S. provided $16 TRILLION in secret loans  to bail out American and foreign banks

    (Not that the "American and foreign" really means anything; these corporations consider nation states as their subjects, so any distinction between American and foreign is pretty much irrelevant).

    I don't need to be a conspiracy theorist to see that any organization that can create $16 trillion dollars out of thin air is a problem.  Or is there some magic tree where that money grows?

    Talk about ignoring the elephant in the room.  I haven't been able to find a single article on the Fed audit in "main-stream media".

    Oh, and as usual, excellent diary.

    I am become Man, the destroyer of worlds

    by tle on Mon Aug 08, 2011 at 08:06:47 AM PDT

  •  What made S&P God? (0+ / 0-)

    Interestingly, regulations are being written under Frank-Dodd which would mitigate the importance of the ratings agencies in valuation of wealth & debt.  

    Got revenge, S&p?

  •  Nope... (0+ / 0-)
     In fact, some money managers already get this and arecutting ties with these bozos.

    If you knew something about how money managers work, you would know that the investment guidelines provided by their clients mandate that the securities held have certain ratings provided by, drum roll please, the rating agencies.  

    Until clients change their guidelines the money managers can't ditch the agencies.....

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