And Who Are Standard and Poor's to Talk?

Given Standard and Poor's decision to downgrade the United States' sovereign debt rating, this may be a good time to remind ourselves of just how culpable this company is for the financial and economic crises our nation continues to face.

As Alain Sherter explains:

‎"In the years leading up to the housing bust, Moody’s, S&P and Fitch passed out AAA ratings like candy bars at Halloween. In mid-2007 and early 2008, with the real estate market in free-fall and mortgage delinquencies soaring, they suddenly started downgrading scads of formerly top-rated securities. In January of ‘08, for instance, S&P lowered ratings on more than 6,300 and 1,900 CDOs — in a single day…"

Oops. And, as Richard B. Margolies reported:

"Prior to the bursting of the housing bubble, Moody’s, S&P and Fitch each consistently provided positive credit grades on mortgage-backed securities despite the fact that they were extremely risky products. Much of the criticism of the credit rating agencies relates to the fact that these firms are paid by the issuers they rate and therefore have a conflict of interest."

I guess the taxpayers should have paid a commission.

If there were any justice, these people would have lost their jobs well before those harmed by their malfeasance the past few years.

On Debt Ceiling, Ronald Reagan Too Liberal for Today's Republicans

Here's another example showing that Ronald Reagan would be too liberal for today's Republican Party: he didn't think fooling around with a national debt default was responsible.

On November 16, 1983, President Reagan sent a letter to the Senate (link here to pdf) in which he warned:

The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.

The Nation can ill afford to allow such a result. Indeed.

That wasn't the only time President Reagan issued such a warning. On September 26, 1987, Reagan made a similar argument in his weekly national radio address:

Unfortunately, Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility — two things that set us apart from much of the world.

That's also pretty clear. And could be said, word for word, today.

Rachel Maddow did an excellent segment on this subject. It's well worth your time to watch.

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