We're Taking Advice from Whom?
Let me start by saying American should pay its debts. If the debts are really, really large -- that's too bad. We owe the money and we have to pay it. We're the richest, most blessed nation in the history of the world and we have to pay what we owe. Period.
If I had any clue as to how to come to an agreement between what President Obama can live with and what the Republican freshmen in the House will swallow, I'd be packing for a fun-filled weekend at Camp David.
I don't, so I'm not.
On Wednesday a company known as a ratings agency, Standard & Poor's, weighed in on this debt limit business by putting the whole U.S. of A. on what it calls a "credit watch."
If we slip into the Wayback Machine we will see that S&P along with its partner in crime, Moody's Investor Services, were two of the major players in pretending that all those securitized mortgage instruments that were being bought and sold up until the whole world went broke had "AAA" ratings even though they turned out to have the accumulated value of a bucket of beach sand.
Standard & Poor's either lied about the value of all those mortgages, or it didn't understand how to value them, or it did understand that they were worthless but it (and Moody's) collected fees from the geniuses who almost made our ATM cards as useful as baseball cards in our bicycle spokes.
I think they knew what they were looking at but chose not to share that information with their high-paying clients so those clients - the executives at the big investment banks - could sell those worthless instruments to their pals in London, Frankfort, Paris, and Beijing, collecting enormous fees and buying larger and larger houses in the Hamptons.
If I were in a position to do so, I would haul the heads of Moody's and S&P in front of Congress, make them swear to tell the truth, and ask them if they had any conversations with Treasury Secretary Timothy Geithner or any of his people prior to issuing this warning.
My strong suspicion is that the White House, looking for leverage, told Geithner to call his buds at Moody's and S&P and get them to issue a warning hoping it would weaken the resolve of Congressional Republicans.
Timothy Geithner, remember, was the Chairman of the New York Fed when everything was collapsing back in 2008. He apparently didn't have any idea that Lehman Brothers, Bear Stearns, Merrill Lynch, and all the others were selling tissue paper and calling it gold bullion based on the ratings of Moody's and S&P.
Naturally, we made him Secretary of the Treasury.
Another actor on the stage this week has been JP Morgan Chase, which also warned about the dire consequences of missing the debt ceiling deadline of August 2.
JP Morgan Chase, bought the investment bank Bear Stearns for about $2 per share after the Federal Reserve (remember that Geithner was New York Fed Chairman) agreed to finance the deal to the tune of $300 billion during the Wall Street panic in the Spring of 2008.
By the way, JP Morgan reported its quarterly earnings this week and - what's this? - its profits rose 13 percent to $5.4 billion up from a paltry $4.8 billion a year ago.
That, in spite of the fact that JP Morgan's chairman, Jamie Dimon warned that the company has "already incurred significant costs, charged-off substantial amounts, and established significant reserves for mortgage-related issues."
I wonder if he means the "mortgage-related issues" that Moody's and Standard & Poor's rated as high-quality, take-them-to-the, er bank, can't-go-wrong "mortgage-related issues."
Nevertheless, with those results JP Morgan's executives, managers, limo drivers, and corporate pilots will all get brand spanking new bonuses. Did I hear President Obama put them in the same list as oil companies and successful authors as organizations which should have their tax loopholes closed?
No? Maybe I was out sick that day.
I say we tax the hell out of anyone who has Timothy Geithner's personal cell phone number.
I don't think we need Moody's, Standard & Poor's and their masters on Wall Street telling us what is good for us.
We already know that they have been very, very bad for us.
On the Secret Decoder Ring today: Links to the WSJ's piece on Standard & Poor's warning on the debt limit, a look back at JP Morgan's purchase of Bear Stearns, and Morgan's profit report. Also a Mullfoto of a poster a Peace Corps headquarters and a Catchy Caption of the Day with which I wholly, totally, and completely disagree.