For those that may have forgotten - or perhaps purposefully blocked it from memory - Summer 2011 was dominated by the debt ceiling debate. Like you, we would prefer not to relive that experience, so here once again is our modest proposal to fix the country's credit standing.
5. More Debt Ceiling Stupidity -- published August 5, 2011
Now that President Obama has put pen to paper and raised the debt ceiling, thereby averting a catastrophic (at least that's what he told us) downgrade of U.S. credit, we have a suggestion for our representatives in Washington to nullify this issue the next time it arises (and trust us, it certainly will): Bribe the ratings agencies to keep America's AAA rating.
Hey, it worked for Wall Street!Moody's Investors Service (MCO - Get Report) and Fitch Ratings affirmed their top-notch AAA credit ratings for the United States on Tuesday. The ratings agencies did warn, however, that downgrades were possible if the government failed to follow through on its debt reduction measures and the economy weakens. Moody's currently lists the outlook for U.S. Treasury debt as negative. The compromise "is a positive step toward reducing the future path of the deficit and the debt levels," Steven Hess, senior credit officer at Moody's in New York, told Bloomberg. "Although the agreement is a good first step in adjusting the fiscal challenges that the U.S. faces, it is just a first step," said David Riley, Fitch's London-based head of sovereign ratings, also to Bloomberg. Thanks for the advice guys and we promise to step-to-it. But before we do, would somebody please remind us when exactly our entire government started taking marching orders from these clowns? If memory serves, aren't these the same so-called analysts who, along with Standard & Poor's, a unit of McGraw-Hill (MHP), were not too long ago excoriated by Congress for giving solid gold ratings to the toxic mortgage bonds which caused a real, not hypothetical, meltdown? Damn straight. And payback sure is a bitch. Or, perhaps in this case, a potential B+ grade for our Treasuries since the ratings agencies are calling the shots now. Let's reminisce for a second, shall we? It was just this April when Sen. Carl Levin (D., Mich.) released his final report on the financial collapse, which accused the ratings agencies of engaging in a "race to the bottom" to win Wall Street's business. According to the report, "Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment." So if Wall Street "fat cats" -- to borrow the President's term -- can get special treatment by paying off the ratings agencies, why not the even fatter cats in Washington? The government has all the money it can print if it wants to pay for inflated grades. And you know those greedy graders won't pass up a shot at some cheap, easy greenbacks. The big question is whether China's Dagong Global Credit Rating Co. will be as easily bought off. China's rating agency cut its credit rating for the U.S. this week to A from A+ with a negative outlook. And when it comes to our debt dilemma, our creditors in China are the fattest cats of all, so we better step lively. Or soon we'll be walking the plank.