FRONT PAGE CONTRIBUTOR
Downgrade This! Standard and Poor’s Sued By US Government
Credit Repair The Tamerlane Way
A very powerful group of people has advised Standard and Poor’s to reconsider some of their recent bond rating decisions. In a vacuum, this could be seen as condign. S&P’s has a track record for being too cozy with Wall Street brokerage houses that issued mortgage-backed securities based upon sub-prime mortgages. S&P, like Moody’s, like Fitch, overrated the quality of many of these MBS bonds which helped contribute to the economic unpleasantness of the last five years.
However, unlike Moody’s, unlike Fitch, S&P deviated from the hypocritical script and began putting bond issues under a more focused microscope. They found fecal matter strewn throughout and began to rate securities issues accordingly. Regrettably, some of those issues S&P took the hatchet to were USG debt securities. In August of 2011, S&P downgraded US debt from AAA to AA+. Thus S&P will be tortured with the legal equivalent of amateur proctology by the pathetically obvious Obama Administration.
So now the US Just-Us Department has gotten around to enforcing the law on those evil ratings agencies that are being scapegoated for the abysmally stupid US government housing policies and laws that helped spur the 2007-2009 Mortgage Market Meltdown. You see, S&P, and only S&P is now the subject of the wrath of Gropenfurher Holder. The parent company of S&P, Mcgraw Hill Inc., announced that they were about to be sued by the DOJ. Rueters describes how this will help the USG prevent any future “misunderstandings” with credit rating agencies that get all frisky and ask unpleasant questions.
Shares of McGraw-Hill Cos, the parent of S&P, plunged 13.8 percent on Monday after news of the pending lawsuit surfaced, their biggest one-day percentage decline since the 1987 stock market crash, according to Reuters data. An announcement of a lawsuit is expected on Tuesday, a person familiar with the matter said. The news also caused shares of Moody’s Corp, whose Moody’s Investors Service unit is S&P’s main rival, to slide 10.7 percent.
A while back I implied that the US Border Patrol was held in contempt for not enforcing the borders until occasions where they did enforce the law. Then, the USBP gets hated and despised and accused of being baby-killers. A similar thing has just happened to Standard and Poor’s. They egregiously executed their mandate. They gave The USG justice rather than fairness, and that my friends the DOJ just won’t allow. Justice is what the so-called Obama Administration inflicts upon people who have the gall to piss them off.
Perhaps this fuels the suspicion of people who believe that major financial markets no longer square with reality. The true angst over the so-called Bernanke Put isn’t that the Fed Chair is desperately attempting to salvage millions of IRA and pension fund accounts that threatened to start floating Tango Uniform right before our largest generational cohort reached the age at which they were promised the opportunity to retire. People look at actions such as The DOJ’s blatant dope gang threat against Standard and Poor’s and walk away believing something much more sinister. James Howard Kunstler gives us a nice, representative sample of the paranoia.
This cattle drive into stocks is strictly a political gambit. The cattle are being driven to the slaughterhouse. It’s discretionary strategic national financial suicide. They’re driving up the stock markets for cosmetic purposes, to make it appear that an economic recovery is going on, and with the aim of setting in motion a self-reinforcing financial feeding frenzy in this rush to “equities.”
This would pretty much directly accuse the powers that be of erecting a Potemkin village of horse-manure economic data. Sort of like Brad Woodhall tweeting out that Q4 2012 was “The most beautiful GDP contraction you will ever see.” Perhaps this what Ray and Dave Davies of the Kinks would have called a Rock and Roll Fantasy.
Woe betide Standard and Poor’s for having the temerity to unplug our divine right monarch’s over-heating stack of amps.