NSFW Episode 31: DOWNgrayedd

You guys know me--I hate--DETEST--Obama as much as any patriot and the U.S. may deserve a downgrade from AAA, but S&P's reasoning is asinine. Is the U.S. somehow more creditworthy today than it was in the fall of 2008 when the world was falling apart and we were on the brink of a national and global meltdown? What the S&P said was that the U.S. is LESS creditworthy today because of the bitter rancor in Congress' debate about raising the debt ceiling with spending cuts. What S&P is saying, in turn, is that it would have been better for America's credit rating had Congress harmoniously raised the debt ceiling like it usually does than for there to be a bitter debate about cutting spending and bending the long-term cost curve. That makes no sense at all...whatsoever.

In addition, listen to investors, the people who do the talking with their money. The rating agencies are saying the long-term outlook is "negative" for U.S. debt, and yet investors are gobbling up 30-year Treasuries and 30-year Fannie Mae notes like they're going out of style, even more so after the "downgrade". And I'd feel better about the downgrade if S&P's CEO hadn't been all over TV afterward basking in the moment. The whole thing feels like a disingenuous act from a bunch of losers seeking exposure. You know the old saying, "Those who can't teach"? I say, those who can't rate.