Offering Hope

UPDATE:  And they hire lobbyists, too.  Surprise, surprise.

President Obama needed to spend the entire weekend seriously bashing Standard & Poors. And not just because of Friday’s downgrading of the U.S. Credit Rating. He needed to spend the entire weekend questioning the S & P’s credibility in making such a judgment. He needed to remind the American people that the S & P – and other institutions with unchecked power – are the ones that got us into this mess.

Just like Rep. Barney Frank (D-MA) did here:

Rep. Barney Frank (D-Mass.) angrily denounced the ratings downgrade, saying S&P was “trying to justify their reputation” after failing to spot problems in the nation’s financial system before the economic crisis of 2008.

“These are some of the people who have the worst records of incompetence and irresponsibility around,” Frank, the top Democrat on the House Financial Services Committee, said on MSNBC’s “Rachel Maddow Show.”

And just like former Clinton-era Labor Secretary Robert Reich, did here. The emphasis is mine:

Pardon me for asking, but who gave Standard & Poor’s the authority to tell America how much debt it has to shed, and how?

If we pay our bills, we’re a good credit risk. If we don’t, or aren’t likely to, we’re a bad credit risk. When, how, and by how much we bring down the long term debt — or, more accurately, the ratio of debt to GDP — is none of S&P’s business.

S&P’s intrusion into American politics is also ironic because, as I pointed out recently, much of our current debt is directly or indirectly due to S&P’s failures (along with the failures of the two other major credit-rating agencies — Fitch and Moody’s) to do their jobs before the financial meltdown. Until the eve of the collapse S&P gave triple-A ratings to some of the Street’s riskiest packages of mortgage-backed securities and collateralized debt obligations.

Or Paul Krugman did, in The New York Times today:

It’s not the whole story, but something like this threatens to develop:

1. US debt is downgraded, sparking demands for more ill-advised fiscal austerity

2. Fears that this austerity will depress the economy send stocks down

3. Politicians and pundits declare that worries about US solvency are the culprit, even though interest rates have actually plunged

4. This leads to calls for even more ill-advised austerity, which sends us back to #2

Behold the power of a stupid narrative, which seems impervious to evidence.

And then this morning, he needed to outline steps explaining to the American people how he – in his leadership capacity – was going to limit the ability of such institutions, to influence economic policy to the extent necessary. Instead, we got this:



Gridlock. Legitimate source of concern. Need to tackle our deficits. Spending cuts.

Oh yeah, and tax “reform” and “adjustments” to Medicare that we need not fear. Common sense and compromise. Lack of political will. And some stuff about jobs that had little to do with creating decent jobs that won’t cause people ulcers as they try to figure out how to pay exorbitant health insurance bills.

Despite this President's continual efforts to offer hope, the words "depressing" and "bewildering" seem best suited, for today,