Both Ezra Klein and Felix Salmon defend S&P from criticisms. Salmon's defense is very telling:
S&P is not judging the quality of Treasury bonds as an investment.
Say what? Then in what way is S&P issuing a credit rating? If S&P acknowledged they were writing a political Op-Ed, that would be one thing. But in fact, S&P is purporting to do precisely what Salmon says it is not doing - judging the creditworthiness of US government obligations. Salmon's argument makes no sense.
Certainly as a "creditworthiness" analysis, S&P's work does not stand up to any scrutiny. That perhaps explains the sloppy and elementary errors in its work. Via Krugman, Treasury skewers S&P:
In a document provided to Treasury on Friday afternoon, Standard and Poor’s (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error – a basic math error of significant consequence – S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one.
[. . .] S&P’s $2 trillion mistake led to a very misleading picture of debt sustainability – the foundation for their initial judgment. This mistake undermined the economic justification for S&P’s credit rating decision. Yet after acknowledging their mistake, S&P simply removed a prominent discussion of the economic justification from their document. In their initial, incorrect estimates, S&P projected that the debt as a share of GDP would rise rapidly through the middle of the decade, and they cited this as a primary reason for a downgrade.
As Treasury says, "[t]he magnitude of this mistake – and the haste with which S&P changed its principal rationale for action when presented with this error – raise fundamental questions about the credibility and integrity of S&P’s ratings action."
To defend S&P, Salmon argues that:
[A]all sovereign defaults are political, not economic — especially defaults by countries which borrow exclusively in their own currency. S&P and Moody’s can look at all the econometric ratios they like, but ultimately sovereign ratings are always going to be a judgment as to the amount of political capital that a government is willing and able to spend in the service of its bonded obligations. If Treasury really believes that S&P based its judgment fundamentally on debt ratios and the like, it’s making a basic category error about what it is that sovereign raters actually do.
If this is the case, I think someone, S&P especially, should point out that in fact, S&P is NOT doing a credit rating, but some type of "political willingness" rating. Of course no one will care what some guy name John Chambers at S&P has to say about politics. If they were truthful about what Salmon says they are doing, no one would even report on what S&P thinks about this.
This is a big lie by S&P is Salmon's defense of S&P.
And even that defense is ridiculous. I can't speak for other countries, but in the United States, there is a constitutional obligation not to default on debts. There will never be even a technical default by the United States government. Because the 14th Amendment prohibits them.
Or does the United States Constitution not count in determining "political willingness?"
Any way you cut it, these defenses of S&P are an embarrassment for those providing them.