U.S. Gets Bad Report Card From Teacher: AAA to AA+, Spankings to Follow

S&P notices US debt yesterday for 1st time

It looks like fiscal and monetary policy are dead, almost worldwide, but especially here in the U.S. now that the rating agency S&P has stepped in to wipe away the Triple-A credit rating of the Federal government. This would be the same Standard and Poors that missed a pre-2008 opportunity  to accurately assess the risk of numerous asset classes, putting a positive imprimatur on some very shaky financial products and thus playing a massive part in the world's 2008 financial meltdown.

I guess better late than never when it comes to doing your homework. This downgrade comes on Obama's watch and his enemies will use it to baste him like a turkey in dubious sauces. We can see more clearly that this would in fact be primarily or mostly Obama's fault if, A) the entire world was not now struggling with the same issues (Hello Italy, Greece and Spain) and B) so much of the economic policy limitations of today were not the direct product of slutticatory policy during times predating Obama.

We fully expect people to draw the wrong conclusions from all of this. Or, we expect that the people with the power to make things worse to in fact draw the wrong conclusions and... make things worse. It's like those people who hate Obama's bailing out the banks, failing to realize that it was Bush's TARP policy and further, that financial firms like Bank of America are still struggling with residue from the mortgage crisis (lending credence to the idea that bailing out the banks was necessary despite the seeming populist position that killing your bankers is the first step toward greater capitalism and financial solidity).  There are a lot of folks who cannot properly locate the problem or define the solution.

Monday should be a blizzard of a day, with some people making a ton of money going forward, and the majority of average persons (with money managed in pension funds and retirement plans) taking a huge hammering that will probably continue for several months. It's not just us. Europe has to get its junk together before there is enough room for people to relax and breath and imagine that things can improve.

Until then, we can thank S&P for picking exactly the wrong moment to get all hyper about due diligence and accurate debt ratings.