Saturday, August 6, 2011

Behind S&P's Downgrade of U.S. Government Debt

Who knows what is really behind S&P's downgrade of U.S. government debt? The U.S. government owes so much money that it's been clear for years that the only way the debt would be paid off is through the Federal Reserve printing money and inflating the government out of a debt crisis. It's odd for S&P to suddenly discover the debt crisis. There are a number of reasons this may be occurring now.

1. They could be working with the government to create a panic atmosphere in which it will be easier to raise taxes.

2. They could be working with Republicans to make the President look bad.

3. S&P is just inept, afterall, as Francine McKenna points out, S&P (owned by McGraw Hill) is audited by Ernst & Young. Who audited Lehman.

Here's the most likely answer:

4. A little of all of the above.


  1. I'd say they are working with the Democrats to make the Tea Partiers look bad. There has been a concerted effort to give "credit" (or blame) to the Tea Partiers for the deal. They are looking to destroy any semblance of a liberty movement.

  2. The psy-war is in full swing:

    August 3, 2011:
    US officials claim China behind huge hacking effort:

    "In an operation dubbed “Operation Shady RAT,” the hackers, who were “motivated by a massive hunger for secrets and intellectual property,” penetrated the networks of 72 institutions, including the United Nations; the International Olympic Committee; U.S. government agencies; the governments of Canada, South Korea, Taiwan, Japan, and Britain; and various defense contractors and technology firms.

    Some organizations that had their security penetrated were compromised for less than a month. Five targets saw intrusions on their networks stretch for two years or longer: a South Korean government agency, a county government in Southern California, an Olympic Committee of an unnamed Asian country, an unnamed U.S. state government, and an American satellite communications company.

    According to the McAfee paper, intruders reportedly sent targeted “spear-phishing” e-mails with malware to individuals who had high-level access to the targets that, upon their opening, would trigger an exploit that would open a backdoor communication channel with the hackers’ servers.

    “This will be quickly followed by live intruders jumping on to the infected machine and proceeding to quickly escalate privileges and move laterally within the organization to establish new persistent footholds via additional compromised machines running implant malware, as well as targeting for quick exfiltration the key data they came for,” the report said."

    August 6, 2011

    China Threatens US that it can't keep borrowing:

  3. According to an article in The Atlantic S&P could be using the downgrade as a way to presure the Obama administration about the new financial regulations (Frank-Dodd Act).

  4. I know what is behind the S&P downgrade:

    1. Implement a VAT tax.

    2. Raise gas tax to $1.00 a gallon.

    This is really simple to figure out, people!
    What would you do as a bankster/counterfeiter terrorist?
    Everything else you hear about this is only a distraction.

  5. Or there is no "conspiracy", and they've just realized that it's become so comically obvious to the whole world that their ratings of the US are out of line with reality, that their reputation was taking too much of a hit not to say anything anymore. If you listen to talk on the ground you will have heard increasingly more and more people regard the ratings agencies as a joke. They had to do something. That's my guess.

    I would like to believe there is a "conspiracy" as much as anyone else, because it's always more comforting to know things are planned, but judging by the events of the past few weeks, I think the whole corrupt kleptocratic charade is simply coming apart at the seams, and that nobody is really in control anymore. We're in for an interesting ride.

  6. Is it possible S&P decided to make a judgment instead of issuing a rubber stamp? They've been patsies for 71 years. How long can educated people, even bureaucrats, witness gross profligacy and ignore the implications? Yes, nothing is as it seems in D.C., and as Bob says who knows what's really behind the AA+ rating, but let's not ignore the simple truth that a downgrade is long overdue.

  7. George and Anon @12:20,

    If S&P really had scruples and finally looked at US credit objectively, I think they would have downgraded to B- or lower...