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08 August, 2011


Why did Congress not insert a line into the budget for paying off the US credit rating agencies?

It worked for the financial firms who were busy trading toxic products that companies--including Standard and Poors, which just downgraded the US rating--winked at and rated highly, causing the economic crisis we are now in. Nobody went to jail over that, and the corrupt bastards who put in the fix made out like the bandits they are.

Reporters spill ink and bits over the rationale for the downgrade, while pundits conjure up whatever consequences will entertain their audiences. Here's a basic article from the Washington Post; you may not agree with that organization's politics, but the story mostly limits itself to the facts of the case.

While missing the point almost entirely.

The downgrade is a perfect metaphor for our government's demise. Ever since Reagan, the Depublican Party has wanted the government to shrink (in the case of ideologically driven zealots) or at least demur to The Market (in the case of the business wing). Now, a company whose complicity in massive fraud should have resulted in a decimation as the culpable employees were hauled off to prison is instead punishing the government (and along with it, the local governments and commoners who have run of the mill investments, and who must borrow money on the open market). The administration reportedly objected, but was as impotent in maintaining AAA status as it was in negotiating with the GOP.

Is there any question who is in charge?

Decades of de-regulation gave big business the freedom to make more money than ever, with less obligation than ever to society at large. The "too big to fail" myth and some well-timed extortion gave them a windfall when their filthy house of cards fell, a massive transfer of wealth from public coffers (I chipped in, and so did you, most likely) to corporations and companies. And now, just to let the government know who is in charge, the perpetrators decide it's time to downgrade the government and let the stock market dive.

Well, not entirely to punish the government. 

Because if you follow the money, you see some interesting side benefits, and maybe some structural change that makes the upper hand that business already enjoys that much stronger. The stock market was probably due for a correction anyway, having gained value more on the basis of speculation than the anemic and jobless "recovery." With no major corporate welfare on the horizon, the smart money jumped out at the opportune moment when it would punish the administration (after all, Obama only gives them 95% of what they want) and, oh yeah, make a pile of money while the suckers flounder and panic.

And now, with its less than pristine bond rating, the US government can expect to pay more to borrow that money. This is one arena where trickle down theory is likely to come true. States, counties, and municipalities are likely to see interest rates rise as well. Consumers (the name for what used to be called "citizens" in quaint times gone by), if and when financial institutions decide to start loaning more openly from their enormous reserves, can also count on paying more. 

It infuriates me to see the mastery with which this has been played by the wealthy few. They own enough representatives and senators to make sure that they are never substantially constrained in their practices, and mock the ability of regulators to keep up with their sophisticated larcenous financial instruments. When their more ridiculous gambles go awry, they demand that the government bail them out. If populist anger should tempt the congressional puppets to think twice, actions like the downgrade remind them of the big capitalist thumb holding them down.

The stated basis for the S & P downgrade--that the debt ceiling debate brinksmanship reeks of dysfunction, that there is no reason for confidence that the same clowns will come up with the majority of cuts promised, and so on--is entirely plausible. But then why did they not come to similarly wise conclusions before the private sector imploded our economy?

The takeover is complete. Now, maybe Wall Street solons will be freed from having to spend tours of duty in the cramped and underpaid offices at Treasury, Commerce, and the Federal Reserve, and just issue their orders from the board rooms where power truly resides. Unless the people demand it (and that seems unlikely so far), the government has been downgraded, and the financial leaders are fully in charge.

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