Kenneth M. O’Brien
On Sunday, August 7, I wrote an article titled “The S&P Sucker Punch”.
At the beginning of that piece I wrote, “If ever there was a situation that called for widely publicized hearings by the U. S. Senate it is the action by Standard & Poor’s to downgrade the debt of the United States.”
In the midst of the post, I reminded readers that, “The most important thing to remember in this discussion is that Standard & Poor’s is a business.”
At the beginning of that piece I wrote, “If ever there was a situation that called for widely publicized hearings by the U. S. Senate it is the action by Standard & Poor’s to downgrade the debt of the United States.”
In the midst of the post, I reminded readers that, “The most important thing to remember in this discussion is that Standard & Poor’s is a business.”
At the conclusion of that article I wrote, “In my opinion, S&P is using its influential, but misunderstood, role as an arbiter of credit worthiness to influence public policy for its advantage. Part of this is the corporatist agenda to create a narrative that will bring about the defeat of President Obama and other Democrats in 2012.”
The very next day, no less a bastion of right wing extremism than Redstate.com ran an article titled, “In All Seriousness, What If Barack Obama Is Right?”
In that article conservative doyen Eric Erickson wrote:“What if Barack Obama was right and S&P just got it wrong.
Here’s what I’m hearing and it gives credence to this theory….
S&P, I’m told, began telling some of its clients about the downgrade on Friday morning. That’s why the market was so screwed up on Friday….
S&P, I’m told, began telling some of its clients about the downgrade on Friday morning. That’s why the market was so screwed up on Friday.
By Friday afternoon, the Treasury Department told S&P it had made a $2 trillion math mistake.
But S&P had already told its clients about the downgrade. So it couldn’t walk it back now without a major loss of confidence in its credibility. Could you imagine that conversation? “Hey . . . um . . . Joe. Yeah, Charlie here from S&P. So . . .um . . . we made a $2 trillion math mistake in our downgrade analysis. . . . What’s that? You just lost $500 million in the market because of it? Oh . . . um . . . sorry Joe. Better luck next time.”…
But S&P did the downgrade. And by any objective measure, it would need to downgrade France for the very same reasons it gave, but it has not done so yet — though that may change.
So maybe the White House is right and S&P figured it needed to save face, do the downgrade, and come up with a loosey-goosey reason that both sides could seize on to fight it out while ignoring that S&P just made a major mistake and the country took it on the chin because of that mistake.”
Yesterday Reuters reported that the SEC had launched an investigation of Standard & Poor’s for potential insider trading relating to the downgrade of U.S. Treasury Securities.
” SEC's move is part of a preliminary examination into potential insider trading, the FT [Financial Times] said.”
The same article went on to report, “The U.S. Senate Banking committee has begun looking into last week's decision by S&P's to downgrade the U.S. credit rating, a committee aide told Reuters on Monday.”
The latter report was provided substance by John McLaughlin on his weekly PBS program “The McLaughlin Group” by forecasting such action by the Senate Banking Committee as his final prediction on this week’s broadcast.
Just to repeat, you heard it here first.
