"S&P prepared an analysis to justify a specific conclusion"

[babylonsister]

Posted with permission.

Almost makes me question if they're in cahoots with a specific party to trash a certain person. :think:

http://www.washingtonmonthly.com/political-animal/2011_08/a_trillion_here_a_trillion_the031358.php


A trillion here, a trillion there

By Steve Benen


Before we get into Standard & Poor’s decision to downgrade United States debt, it’s worth appreciating the events that immediately preceded the announcement.

Officials from Standard & Poor’s provided documents to the Treasury Department, explaining the downgrade. Obama administration officials noticed a problem: the S&P numbers didn’t add up.

On Friday, the company notified the Treasury that it planned to issue a downgrade after the markets closed, and sent the department a copy of the announcement, which is a standard procedure.

A Treasury staff member noticed the $2 trillion mistake within the hour, according to a department official. The Treasury called the company and explained the problem. About an hour later, the company conceded the problem but did not indicate how it planned to proceed, the official said. Hours later, S.& P. issued a revised release with new numbers but the same conclusion.

Got that? S&P prepared an analysis to justify a specific conclusion. The analysis was off by $2 trillion. Treasury explained to S&P that the analysis wasn’t even close to being accurate, which led the ratings agency to concede they’d made a mistake.

And a few hours later, S&P decided to reach the same conclusion anyway. The agency wanted to proceed with a downgrade; whether its numbers added up was irrelevant.

That certainly inspires confidence in the integrity of Standard & Poor’s decision making, doesn’t it?

I’m reminded of something Joe Klein said in April, after S&P first started making threats about this.

The news that Standard & Poor’s has decided to issue a warning that the US government’s AAA bond rating might be in some jeopardy if a deficit-reduction agreement isn’t reached should elicit several responses from sophisticated readers. My own threshold response is: Hey, weren’t you the same guys who gave AAA ratings to the repackaged subprime mortgage-backed securities that, in truth, were utter dreck? And didn’t that help cause the 2008 economic collapse? And didn’t subsequent accounts reveal that you were in bed with the banks whose products you were supposed to be rating? I mean, you guys are still in business? Amazing.

[Dennis Donovan]

1. Recommended!

Outstanding post!:hi:

[underpants]

2. WOW if only they were good at the math thing. Their projection assumes no tax increase

which tells you how bad of a "deal" it was that the Tea Baggers scared the Republicans into

Was this the 98% you wanted Boehner?

[still_one]

3. S&P disgraced itself during the financial collapse. I remember when they were rating Enron a buy

just before its collapse

Where was the S&P or the other rating agencies when reagan started spending wildly. Remember star wars?

How about during the bush administration when he involved the country in two wars, and reduced revenue, and pushed for complete deregulation

Yes, it is mighty convenient that these clowns decide to "downgrade" now

The most telling fact is that there has never been a greater demand for U.S. treasuries

S&P's downgrade is and will be ignored.

It is funny how analysts and rating agencies who have about and 85% failure rate in their downgrades or recommendation are still given prime time

I will tell you when there is news, its when an analyst gets it right.

[unblock]

4. rating agencies don't rate anything a "buy", and i can forgive them for the enron thing

after all, enron was committing fraud and concealing information from everyone, including the rating agencies.
yes, they are supposed to try to drill into it, but in practical terms it's not always possible to unearth complex fraud.

the u.s. sovereign rating, on the other hand, is far more open -- the rating agencies don't know any more than the public does, it's just their opinion, not reflective of any better information. so you're right, this will largely be ignored, because everyone has already factored in how dysfunctional congress is and how the tea party idiots have effectively taking tax increases (the obvious solution to several of our economy's problems) off the table.


after taking a rap for over-rating securities prior to the credit crisis, they are now overcompensating and under-rating, and this is the most visible example. i would go as far as to say that this is the prime motivator in this downgrade -- wanting to show that they don't over-rate like they used to.

as a practical matter, u.s. treasuries remain the safest investment on the planet, and it's ludicrous to think that countries like the u.k., france, guernsey, and the isle of man all merit triple-a ratings yet the u.s. does not.

[Orangepeel]

5. somebody made money somewhere...

I don't know if it was (just) betting on the downgrade and/or if S&P was straight bought off, but I agree they it seems obvious that they wrote the analysis to justify the conclusion.

[flamingdem]

7. Yes, a billion dollar wager was made on the futures market, an unknown person

that had enough insider info, check editorials to see more.

For sure the global elite are making bank from predicting and bringing about a downgrade/crash

[Whisp]

6. smells like a coup attempt to me.

just pissing angry here.

[flamingdem]

8. I agree. The global elite would do better with less regulation

and they like this jobless recovery and want reductions of SS and Medicare and lower taxes.

Mitt is their guy to continue their piracy.