Issue of the Week: The Incompetent Standard & Poor's
Plus Hero of the Week
Standard & Poor's rating agency helped to create the worst recession since the Great Depression by putting AAA ratings on toxic mortgages that were bundled into securitized debt obligations that were nothing but junk and destined to implode. So, did S&P give these junk investments its AAA ratings because the agency was focusing on keeping its clients happy and keeping those large fees coming in, or were they just incompetent?
Today, the question is: Did S&P downgrade U.S. debt from AAA to AA+ because they are incompetent or because they are being very political—or some combination of both? One clue is that S&P was the only one of the three major rating agencies to downgrade the U.S. debt. And the markets responded with an overwhelming chorus of “Stupid,” as the demand actually went up for U.S. Treasury debt on the following trading day and interest rates correspondingly went down. Obviously the S&P's downgrading may well have been just politics, pure and simple, and had nothing to do with the country's creditworthiness, since actual investors were unfazed.
We don't know the answer to our second question, but it seems some combination of three things: incompetence, S&P's efforts to make Obama look bad and defeat him in 2012, and a defensive posture to cover their butts, since it now makes it very difficult for U.S. Attorney General Eric Holder to investigate and prosecute S&P for their fraudulent AAA ratings of toxic securities, since that would look like retaliation by the Obama administration. S&P may not know how to rate securities, but it does know how to make money and protect its positions.
Heroes of the Week
Kathy's House Volunteers
Treating a serious illness is a costly affair, even for those with insurance. For those who must travel great distances to obtain the required care, transportation and lodging expenditures can add to an already intimidating balance sheet.
Kathy's House, founded in 2001, is a nonprofit hospitality house that provides free lodging and support for physician-referred patients and their caregivers traveling to Milwaukee-area hospitals for medical treatment.
Kathy's House (600 N. 103rd St.) is supported by charitable contributions and the work of volunteers, who give their free time to perform reception-area duties, housekeeping, office tasks, and fund-raising and special event help. Readers interested in helping out-of-town patients through a difficult and expensive time are urged to call the volunteer line at Kathy's House at 414-453-8290 or visit www.kathys-house.org.