Dean Baker speaks to the issue of the US and its AAA rating.
I had considered that the Ratings Agencies might become instruments of national policy, implicated as they are in numerous scandals and misbehaviour. If you don't do the time, then you must have turned cooperative and informant in at least a soft and accommodating way.
But I had never considered this particular angle. Now there is room for doubt that they might serve the will of the US government, but there should be no doubt, given their recent history, that they are all too often willing to say and do whatever pleases Wall Street.
"....This means that if Moody’s were to downgrade the government’s debt, to be consistent it must also downgrade the debt of Citigroup, Goldman Sachs and the other big banks. If Moody’s downgrades the government’s debt, without downgrading the debt of the big banks – or even threatens to downgrade the government’s debt without also threatening to downgrade the debt of the big banks – then it is more likely acting in pursuit of Wall Street’s political agenda than presenting its best assessment of the creditworthiness of the U.S. government.
It is unfortunate that we have to suspect a major credit-rating agency of such dishonesty, but given its track record, serious people have no choice. To paraphrase an old Winston Churchill joke, we already know about the character of the bond-rating agencies, we are only asking if they are prostituting themselves now."
Dean Bakes, Will the US Lose Its AAA Rating?
The quotation that Dean Baker references from Churchill brings to mind this famous anecdote from another British wit:
George Bernard Shaw once found himself at a dinner party, seated beside an attractive woman. "Madam," he asked, "would you go to bed with me for fifty thousand pounds?"
The colossal sum gave the woman pause, and after reflection, she coyly replied: "Perhaps."
"And if I were to offer you five pounds?" Shaw asked.
"Mr. Shaw!" the woman exclaimed indignantly. "What do you take me for!"
"We have already established what you are," Shaw calmly replied. "Now we are merely haggling over price."
