Croker Sack

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." — Henry Louis Mencken (1880-1956)

Friday, August 05, 2011

Now what will lenders do?

The downgrade of Uncle Sam's credit rating by Standard & Poor's today wasn't hard to foresee, given the inability of the Democrats in the Senate and White House to support spending cuts that could rein in the deficits that are anticipated over the next few years.

According to this article in the Washington Post, the compromise reached this week didn't go far enough, and Standard & Poor's concluded that the necessary legislative action to cut spending isn't likely.

The Obama administration apparently doesn't get it, if they really think this sort of judgment about a debtor nation's ability to avoid reaching a point of no return is merely "political" and thus inappropriate.

According to the last paragraph of the article:

Obama administration officials have been critical of S&P for making what was essentially a political judgment and for failing to conclude that the country was making a strong first step to reducing its deficit.

Our political institutions--Congress and the President--have to turn themselves around, which is essentially political no matter how you cut it.

Standard & Poor's and everyone else must make a judgment about the likelihood of such a change. They cannot merely hope for a change.


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