In a certain sense, who really cares what the ratings agencies say anyway? They never did their job during the crisis-they only started lowering credit ratings on Too Big To Fail institutions after the cows had left the barn.
While there reasoning for cutting the U.S. rating in 2011 was understandable in a sense-here is a country that can't even raise it's debt ceiling without such overwrought theatrics-it also kind of underscored the general meaninglessness of the agencies. After S&P's downgrade to double AA, the markets literally yawned. Bonds continues to hit record lows and the U.S. equities market kept rising.
" S&P said in a release that the recent improvements in tax receipts as well as steps taken to address longer-term budget issues improved the outlook for the United States. The agency raised concerns about the ability of policymakers to tackle long-standing issues due to a deepening of a partisan divide in Washington in the last decade, however."
While there reasoning for cutting the U.S. rating in 2011 was understandable in a sense-here is a country that can't even raise it's debt ceiling without such overwrought theatrics-it also kind of underscored the general meaninglessness of the agencies. After S&P's downgrade to double AA, the markets literally yawned. Bonds continues to hit record lows and the U.S. equities market kept rising.
" S&P said in a release that the recent improvements in tax receipts as well as steps taken to address longer-term budget issues improved the outlook for the United States. The agency raised concerns about the ability of policymakers to tackle long-standing issues due to a deepening of a partisan divide in Washington in the last decade, however."
"We believe that our current 'AA ' rating already factors in a lesser ability of U.S. elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling," the agency said in a statement.
What this should augment is that there is no more need for further austerity. I find S&P's not so subtle hint that they want entitlement reform annoying. Still, clearly the President is more in lie with what they are asking for as he's asked for some-hopefully-mild entitlement cuts in exchange for ending the sequester. So when are we going to hear the last of the demands for more budget cutting?
Lately, the Dems have show that they get it and are playing a stronger hand by pointing out Reinhart-Rogoff's errors and the drop in the deficit in making the case that we need no more austerity.
This re-upgrade by S&P is another exhibit.
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